PM must replace his grand aims with real steps to free trade

The question is: what will really be achieved?

The rather panicky downplaying of expectations by the Chancellor at the weekend is ominous. It is all rather different from the noises coming from Downing Street a few weeks ago. 

Then Gordon Brown was boasting he would achieve a "grand global bargain" that would provide cover for a second fiscal stimulus at home. It all looked like a transparent attempt to outmanoeuvre us Conservatives, who warned that the temporary VAT cut wouldn't work because the country couldn't afford it and who oppose a further fiscal stimulus in Britain for the same reason.

If the build-up to the G20 was about creating political dividing lines at home, then it has spectacularly backfired for Gordon Brown. 

It has left him isolated and shown that our concerns over rising debt are widely shared by European leaders. 

The real defining moment came when the Governor of the Bank felt he had to go public in his warnings that Britain cannot afford a second fiscal stimulus - leaving Mr Brown's plans for next month's Budget in tatters. This is what happens when you try to use the international stage to play domestic politics. 

I hope it is not too late for the Prime Minister to make up for these mistakes and focus on the real agenda. Much can be achieved if we are bold enough. Take world trade. This powerful motor of economic growth has driven prosperity and reduced poverty around the world. But it is spluttering badly. 

I have no doubt that when the Governments sit around the table in the Excel Centre they will agree to "reject protectionism". After all, they said the same thing at the last G20 meeting in Washington last November. Since then 17 of those governments have implemented protectionist measures.

What would make a real difference is a decision at the G20 to conclude the long-delayed Doha free trade round. 

I can't think of anything that would do more to stimulate the global economy, boost confidence and provide a powerful answer to the anti-globalisation protesters camped outside the conference centre. 

At the very least, there could be a binding decision to hold tariffs at their existing levels rather than see them rise as the current rules unfortunately allow. 

There is more that could be agreed at the London summit. Everyone pays lip service to the idea that global institutions such as the IMF should reflect the balance of economic power as it now stands. But that means western governments giving up some power to the likes of China, Brazil and India, and so it hasn't happened. This week we could cut through years of bureaucratic wrangling and get it done.  

Greater co-ordination of the regulation of financial services is also on the agenda. We can expect strong words on bankers' bonuses and offshore tax havens. As the person who first said the non-doms should pay more, I think that is right.

Greater regulation of hedge funds is also inevitable, although we shouldn't forget that among the biggest problems have emerged in the retail institutions such as Northern Rock, RBS and now Dunfermline that were supposed to be the most closely regulated.

Where we should be seeing more progress, however, is in both the debate about the future size of global banks and the way we regulate them. What is needed is a new international agreement that they should be required to set aside more money in the good years to prepare for when things turn bad, something David Cameron said we should be trying to achieve more than a year ago.

So we will see whether this summit tackles the hard issues or ducks them.

A good sign would be if we hear less from our Prime Minister of "global grand bargains" and more of the concrete steps on a free trade deal, help for the developing world and international financial reform that remain within our reach. 

That is what true leadership of the G20 would deliver. If it does, all the disruption in London will have been more than worth it.