The leaders of the most powerful countries on earth meet in London this week in a bid to calm the financial storm but a rift between key players is fuelling fears the summit will flop.

There will be plenty of talk at the G20 about financial reform — both to stabilise the markets and revamp regulation — and the evils of protectionism. But much of what is said will not translate into policies once heads of state return home.

At the heart of the debate will be how to restore confidence to a financial system crippled by the crisis in the banking sector and beyond.

US President Barack Obama wants members of the Group of 20 nations to borrow billions more to plough into their economies to drag the world out of recession.

Many countries support Obama's grand borrowing and spending plan but others including Europe's biggest economy, Germany, vigorously oppose more fiscal stimulus. Instead they demand stricter regulation of the battered financial system to restore confidence.

Gordon Brown has voiced support for further action but having already embarked on a massive spending spree he is short of cash and credibility and is likely to take a wait-and-see approach. The Prime Minister was embarrassed last week when Mervyn King, the Governor of the Bank of England, said the UK does not have the room to drive up spending given the size of its debts.

CLICK ON THE IMAGE TO SEE WHAT EACH NATION WANTS FROM THE G20

Richard Jackman, professor of economics at the London School of Economics, said: “Gordon Brown is not in a good position at all because his relations with EU countries are strained at the best of times and will continue to be so, and despite being a cheerleader for fiscal expansion we are not going to be able to do it ourselves. It doesn't set a good example.”

The US wants other countries to boost spending either through tax cuts or expenditure on infrastructure projects and the International Monetary Fund reckons the G20 will spend about 1.5% of their GDPs for 2009 on stimulus spending. However, the amount spent by many European countries and Japan lags that spent by the US and China and is well off the 2% of GDP hoped for by the Americans.

Adam Dixon, international economy analyst at research group Oxford Analytica, said: “The Europeans are resisting calls from the Americans to increase stimulus packages. The Europeans want to focus on financial regulation contrary to the Anglo-Saxon finances of the last 20 years. They are not going to agree on stimulus packages.”

Improved regulation of the financial system has won widespread support and emerging economies in particular will press for major reform of the IMF amid escalating concerns of national debt defaults in eastern Europe, Latin America and other developing countries.

US Treasury Secretary Timothy Geithner wants IMF reserves to be raised from $250 billion to $750 billion but $500 billion looks a more realistic amount. Any large-scale expansion of funds will require a deal between the US and China to give China more say on the IMF as well as voting rights.

Protectionism will again be high on the agenda as it was when the G20 gathered in Washington. However, despite a collective pledge to refrain from protectionism in the face of the global recession, research by the World Bank shows nearly all members have raised trade barriers. “Leaders must not heed the siren-song of protectionist fixes, whether for trade, stimulus packages, or bailouts,” said World Bank president Robert Zoellick. “Economic isolationism can lead to a negative spiral of events such as those we saw in the 1930s, which made a bad situation much, much worse.”

The rank hypocrisy of the G20 summit will be underlined during debates about tax havens. With tax receipts falling as a result of recession, world leaders are desperate to bring tax dodgers back onshore to swell Treasury coffers.

Europe's secrecy jurisdictions — Liechtenstein, Andorra, Austria, Luxembourg, Jersey and ­Switzerland — have all entered into international information sharing agreements.

But while Brown has hailed the beginning of the end for tax havens, London remains a top destination for foreign millionaires who continue to enjoy non-dom status.

Brown has said people should not be “cynical” about what can be achieved at the summit but even his Foreign Office Minister Lord Malloch Brown has warned against “empty promises”.

Amid all the fanfare of the biggest meeting of heads of state in Britain since the end of the Second World War, cynicism and empty promises seem all but guaranteed.