G20 Leaders Meet 2010

Europe's economic policies came under blistering scrutiny as world leaders gathered in Toronto, with the Old Continent being cast by allies as the sick man of the global economy.

Leaders from the Group of 20 top economies huddled in Toronto to discuss policies that might put some heat in a tepid global recovery and turn the page on the worst financial crisis since the Great Depression.

But Europe -- rocked by a sovereign debt crisis that has threatened the future of the euro and the decades-long movement toward continental integration -- found its prescriptions rejected by global partners.

Even before the landing gears were down on the planes of late-arriving leaders, Europe's biggest hitters were forced to admit their ideas for a global bank tax to moderate financial sector excess had been shot down in flames.

A proposal from Britain, Germany and France to impose levies on banks' liabilities or profits appeared to receive close to no backing from other G20 members.
"Three countries supported this idea. We are a year into the process and there are still three countries which support the idea," a senior G20 official told AFP. "The parrot is not sleeping, it is no more. It's dead."

German Chancellor Angela Merkel conceded defeat. "We have to expect that we will get a negative decision," she said.

"The French president and myself will speak in favor of it tomorrow but unfortunately we ... don't have a consensus, neither on a bank levy nor on a financial tax."

The three countries are now expected to move ahead alone with domestic banking taxes, despite initial fears that it may make their banks less competitive. But worse may be to come.