LONDON - Leaders wranggled yesterday on how to fix the global economy, with France and Germany demanding tough action by a 20-nation summit and President Barack Obama warning the United States would stop being a "voracious consumer".
French President Nicolas Sarkozy, who has threatened to walk out of today's London summit, said France and Germany rejected the current summit proposals on reforming the financial system and cracking down on tax havens and corporate bonuses.
Obama and British Prime Minister Gordon Brown, who is struggling to bridge the G20 summit gap, played down the differences but not the scope of the crisis that the summit will have to confront.
"Make no mistake, we are facing the most severe economic crisis since World War Two.
"The global economy is now so fundamentally interlinked that we can only meet this challenge together," Obama said.
But he insisted that while the summit had a duty to produce "the most substantive outcome possible," the "separation between the various parties has been vastly over-stated".
Obama has said stimulus and regulation are needed but said the United States could not shoulder all the responsibility for creating new growth.
The US will have to tackle its huge deficits, while the world has long seen the superpower as a "voracious consumer" that will have to change, Obama said.
With thousands of anti-summit demonstrators gathering in London's financial district, representatives of the Group of 20 leaders negotiated through the night seeking to overcome the rift on the summit communique.
But Sarkozy said there had been no agreement. "Neither France nor Germany are satisfied with the proposals as they stand," said the French leader, who has threatened to walk out of the summit if the measures are not bolstered to his liking.
"I will not associate myself with a false summit that concludes with a statement of hollow compromises, that does not address the problems that we face," he warned.
German Chancellor Angela Merkel has spoken out against governments like the US and Britain spending their way out of the crisis.
But her fears were dismissed by Prime Minister Taro Aso of Japan, whose country has spent massively over the past decade to re-ignite the economy.
"Because of the experience of the past 15 years, we know what is necessary, while countries like the US and European nations may be facing this for the first time," Aso told the Financial Times newspaper.
China's President Hu Jintao headed for London reaffirming calls for reform, efforts against protectionism and reaffirmed the need to prevent this crisis from reoccurring.
Protests against the summit started with thousands of noisy demonstrations in the city's financial district. About 2500 police were deployed across the city to protect the arriving leaders.
The G20 comprises the seven industrialised powers - Britain, Canada, France, Italy, Japan, Germany and the United States - and Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey. The European Union counts as the 20th member. - Sapa-AFP