Britain's eurosceptic prime minister has emerged as a new European super-hero thanks to his rescue-plan to pull the EU back from the brink of financial meltdown. But renewed market jitters and the looming threat of a recession threaten to cut short his honeymoon as the darling of Brussels.
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"I want to pay a very sincere tribute to Mr Brown," said José-Manuel Barroso, the European Commission President, during an impromptu press conference with Mr Brown. "He gave the impetus for our coordinated response. And he sought to contribute to a European and a global solution."
London calling
Mr Brown hurtled into the spotlight last Sunday when he flew to Paris to urge the 15 eurozone countries to follow the British lead to prop up the faltering markets. Even though Britain does not even have the euro, he persuaded his colleagues to quickly inject capital into the banking system - a massive €2.2 trillion - and guarantee loans between financial institutions.
"Over the last few days, Europe came together... to take common action. These are decisions that matter not just over the next few days but over the next few years," said Mr Brown.
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Brown's guide to avoiding a crisis |
Similarly, Dutch Finance Minister Wouter Bos has also seen his approval ratings shoot up thanks to his performance in the crisis, when he floated the idea of an EU rescue plan and greater supervision. "When we see markets fail, both Gordon Brown and myself do not hesitate and we take our responsibilities," he beamed. "And we've seen a lot of other countries follow our example."
Storms on the horizon
Despite the optimistic start of the week, alarming developments are dampening the mood. European markets fell and Britain posted its highest unemployment rate in eight years on Wednesday. Meanwhile, Ireland has slumped into a recession and Germany is teetering on the brink.
"We are definitely not out of the woods," says Karel Lannoo, a financial expert with the European Centre for Policy Studies. "Everything so far has been extremely short-term but this crisis will start biting into the real economy."
| What is Bretton Woods? - The Bretton Woods system refers to the international monetary regime that prevailed from the end of World War II until the early 1970s. - Taking its name from the site of the 1944 conference that created the International Monetary Fund (IMF) and World Bank, the regime was designed to combine binding legal obligations with multilateral decision-making carried out through an international organization, the IMF, endowed with limited supranational authority - But in practice, it was overly dependent on the policies of its most powerful member, the United States |
Mr Brown, who tried to play down the latest unemployment figures with a promise to protect jobs, unveiled an ambition plan to overhaul the financial system. "It's time to move to Stage Two," he announced, calling for a revamp of the financial structures set up at the Bretton Woods conference in 1944. "We need to root out irresponsibilities and excesses and to make sure that we have supervision and global cooperation in the system," he added with gravitas reminiscent of Winston Churchill.
French President Nicolas Sarkozy, who struggled to bill this as his own idea, said: "We need a new form of capitalism. The new Bretton Woods will be in place by the end of the year."
It is unclear, however, just how quickly the EU can move to turn its huge plans into reality and how it hopes to go about improving regulation. In a dig to his British colleague, Mr Bos lamented that the reforms had not gone ahead earlier. "We've had these proposals before but they were blocked by the British."
Tags: Bretton Woods, credit crisis, European Union, Gordon Brown, José-Manuel Barroso, Nicolas Sarkozy, recession, Wouter Bos