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The jubilant mood created by the G20 summit agreements yesterday was rapidly replaced this afternoon by a grim appreciation of the extent of the world's economic troubles as US unemployment soared to its highest since 1983.
The rate of unemployment surged in March to 8.5% from 8.1% the previous month after a staggering 663,000 more Americans lost their jobs. There are now more than 13 million claiming unemployment benefits in the world's biggest economy.
The FTSE 100 index, which had surged as part of the “G20 bounce” last night, continued drifting slightly lower, down 10.75 points at 4114.22 as the figures came in only slightly worse than expected.
Meanwhile, global leaders, who today moved on to the Strasbourg Nato summit, talked of how successful their G20 meeting was. They hailed its $1.1 trillion package to save the global economy, including $500 billion available to the International Monetary Fund to support struggling emerging economies.
Deals cut at the G20 included a framework for improved financial regulation, a commitment to curb bank-executive bonuses and a crackdown on tax havens around the world to ensure they adhere to transparency agreements.
But there was disappointment in some quarters at the vagueness of the commitment to renew the Doha negotiations on eliminating trade barriers. That is likely to come under discussion when, as was announced today, the G7 group of the seven biggest nations meet on 24 April in Washington.
The decision to increase the IMF's resources was welcomed by Royal Bank of Scotland economist Kit Juckes, who said: “The IMF move is a big deal and not just because it's a lot of money. Large sums of money applied to some of the smaller countries can go far in keeping the wolves from the door.
“Throwing the kitchen sink and assorted kitchen utensils at the problems facing the global economy is a good thing. Not everything will work [but] faced with a 10% fall in the wealth of the world's dominant consumer [the US], nothing is going to get us out of recession, except time.
“All of these moves help put a safety net under the global financial system and the global economy. A long recession is inevitable, but further contagion into either emerging-market meltdown or another major financial failure is becoming increasingly unlikely.”
