The world's biggest economic powers are expected to agree next week on an urgent revamp of market regulations, helping them to smooth over a rift about the need for new public spending to combat the global recession.
The G20 hopes to bring world financial markets into line
Indeed, the Group of 20 (G20) landmark summit of the world's richest and emerging economies in London is likely to sign off on plans to bring world financial controls into line with the changes unleashed by fast-paced globalization by stepping up coordinated market supervision and closing off gaps in the regulatory system.
The G20 agreement on overhauling the world financial structure will also help to paper over the differences between member states on the need for pumping more money into the world economy to help kick-start growth and thaw frozen credit markets.
But apart from driving forward the cause of market reform, firm commitments at the summit are likely to be limited to a significant increase in funding for the International Monetary Fund (IMF), which forms a key part of global financial architecture.
"Nothing much is now expected beyond another exquisitely crafted statement that shows how much everyone is in agreement with each other about everything," said Ray Attrill, economist with the research group 4cast.
While hopes have been raised that the economic downturn might bottom out in the coming months, the G20 summit is being held against the backdrop of evidence that the recession is starting to bite amid a stream of disastrous economic data and layoffs.
As a sign that the slump has gained momentum, Thursday's meeting will also coincide with the European Central Bank (ECB) delivering another forecast 50 basis points rate cut.
The prospects of the ECB reducing borrowing costs again comes in the wake of reports showing Japanese exports crashing by nearly 50 per cent in February, German business confidence at about 26-year low and the US economy shrinking by 6.3 per cent in the final quarter of 2008.
What is more, the deepening economic gloom also means that the G20 summit in London's vast new conference center on the River Thames could be held against the backdrop of potentially violent demonstrations on the streets outside.
G20 looking to protect the poor
The G20 wants to shield the poor from the donwturn
Apart from overhauling the world financial system, the G20 leaders are again expected to call for steps to shield those in poverty from the full force of the downturn and to issue a stern warning about the threat posed by climate change and protectionism.
The summit is to be launched Wednesday with a reception at Buckingham Palace followed by what has been billed as a recession-style meal to be prepared by British star chief Jamie Oliver at Number 10 Downing Street, the G20 host and UK Prime Minister Gordon Brown's residence.
But after a three-continent trip aimed at forging consensus ahead of the London's summit, Brown's diplomatic could still face a major test at the meeting with positions appearing to have hardened in the run-up to the gathering.
US President Barack Obama can count on G20 members Japan, Korea, and Australia as well as possibly China to support his push for the summit to take what he said was "bold, comprehensive and coordinated action" to jump start a recovery. The IMF has also called for additional economic stimulus plans.
But spearheaded by German Chancellor Angela Merkel, Europe remains skeptical about throwing more money at the recession, arguing that it will take some time for the measures also introduced to take effect and that the focus should now be on financial reform.
Europe concerned about unsustainable growth
For Merkel it's a question of too much not too little
"This crisis did not come about because we issued too little money but because we created economic growth with too much money and it was not sustainable growth," Merkel said in an interview with Saturday's Financial Times.
Backing up the European stance the chiefs of Europe's two leading central banks, the European Central Bank and the Bank of England, have also questioned boosting funds to deal with the recession.
Representing about 85 per cent of world economic activity and formed in 1999, the G20 includes the world's top industrialized nations, such as Canada and France as well leading emerging economies, such as China, India, Brazil and Saudi Arabia.
But none of the government chiefs attending the London summit will want to see it fail in the midst of the world's biggest financial crisis since the Great Depression.
Least of all Obama, who will be keen to ensure his first major foray onto the world stage, does not end on a sour note.
Obama unlikely to make demands in London
Obama is not expected to make demands for new economic stimulus program by the other members of the G20 top, although it maintains significant stimulus remains critical.
Obama is unwilling to rock the boat on his first big engagement
"Nobody has asked and nobody is asking any country to come to London to commit to do more right now," Mike Froman, the White House deputy national security advisor for international economic affairs, said.
Washington has indicated in recent weeks that it wants European governments to follow the US by spending billions more in economic stimulus, a move most of Obama's counterparts, particularly Merkel and French President Nicolas Sarkozy, have flatly rejected.
But briefing reporters Saturday ahead of Obama's trip, spokesman Robert Gibbs appeared to play down any differences among the leaders.
"The president and America are going to listen in London, as well as to lead," Gibbs said.
White House officials insisted there was a broad consensus on action to restore the economic amid the global recession.
So instead of new concrete budget measures to help haul global economy out of its current downturn, the leaders are likely to take their cue from their finance ministers' meeting this month and simple declare they will do what ever is necessary to fight the recession.
G8 ministers meet to discuss "human dimension"
Meanwhile in Rome on Sunday, labor ministers from the Group of Eight (G8) and six other major economies gathered for talks on the "human dimension" of the financial crisis sweeping the planet.
Unemployment is rising around the world due´to the crisis
The three-day "Group of 14" meeting will bring together the G8 leading industrial powers with the emerging giants China, India and Brazil as well as Mexico, South Africa and Egypt at a time when worldwide job losses are sparking fears of social unrest.
The G14 "social summit" in Rome will urge the G20 to put "people first" as they discuss economic recovery strategies and reforms to the financial regulatory system, Italian Labour Minister Maurizio Sacconi said.
Sacconi said the G14 would advocate a "global pact" to ensure sustainable social protections, investment in people, notably skills development, and job creation, especially in the areas of environmental protection, health and education.
IMF chief Dominique Strauss-Kahn warned last week that "dramatic" rises in unemployment around the world would set the stage for conflict.
Social unrest fears gather credence
Protests, like this one in Paris, have been peaceful so far
The world financial crisis could spark "social unrest, some threats to democracy and maybe for some cases, it can also end in war," he warned during an International Labour Organization (ILO) meeting in Geneva.
The ILO in January said the global financial meltdown could claim up to 50 million jobs over 2008 and 2009, while the World Bank warned that the crisis could push 46 million back into poverty.
ILO chief Juan Somavia will stress in Rome "that we are confronting an inter-connected financial, economic and social crisis, and that the attention of policy makers should turn to the three crises at the same time," his deputy Philippe Egger said last week.
Tens of thousands of people demonstrated in London, Rome, Berlin and other cities on Saturday to express their anger at the human cost of the financial crisis.
Organizers of the Put People First march for "jobs, justice and climate" in London had rejected as "smears" claims in police briefings that marches could be hijacked by anarchists bent on violence.
France last week saw more than a million workers take to the streets in a nationwide strike to force President Sarkozy to boost wages and protect jobs. A protest in Paris left nine police officers injured and led to some 300 arrests.