David Cameron draws on 1930s depression in G20 consensus bid

The Prime Minister said that one of the key factors behind the 2008 financial crisis - the build-up of massive trade imbalances between the high-consuming West and the productive economies of east Asia - had not gone away and might even, according to the IMF, be getting worse.

He accepted that the G20 was not in a "heroic phase" of the kind seen at earlier summits in London and Pittsburgh, when fear of the economic abyss made co-operation on a huge range of issues possible.

But he said it was up to the heads of major economic powers gathered in the South Korean capital to "show that this world, these politicians, these leaders, have learned the lessons of the 1930s - we're going to keep the system open rather than see it progressively close".

Discussions in the run-up to the summit - which only formally opened this evening - have been dominated by anxieties over protectionism and "currency wars".

US President Barack Obama has indicated concern that Beijing is keeping its yuan currency artificially low in order to boost its exports.

But America too has sparked anger from G20 states including China and Germany for its 600 billion dollar round of quantitative easing, which some see as a bid to drive down the value of the US currency for the same reason.

Mr Obama, who arrived in Seoul today at the end of a high-profile tour of Asia, made clear that he was not ready to follow countries like the UK in drawing a halt to the fiscal stimulus policies adopted during the recession to jump-start stalled economies.

"The single most important thing we can do to tackle our debt and deficits is to grow," said the US President.

But Mr Cameron argued that the best contribution that deficit countries - like the UK or US - could make to global economic stability was bringing down their debt.

"Some countries, those with big deficits, need to deal with those deficits," he said. "That is not against global growth, that is helping to promote global growth."

Mr Cameron said his three key priorities for the summit were promoting stability, encouraging free trade and correcting imbalances.

Speaking to a business audience, he said: "One of the main purposes of this G20 should be to show we're going to fight protectionism in all its forms.

"We're going to fight trade barriers, we're going to fight beggar-my-neighbour policies. We're going to fight currency wars. We're going to fight competitive devaluations."

He warned that stability would not be delivered while the current stark trade imbalances persisted.

"The issue is this: One of the problems that lay behind the 2008 crisis was the fact that we had a wall of saving in the East and a wall of debt in the West," said Mr Cameron.

"This massive surplus of cash seeking out places to invest led to the problems.

"According to the IMF, those imbalances are currently getting worse, not better. We mustn't fail to address this issue."

With many states seeking to shore up their domestic economies in order to stem rising unemployment, it was vital for the G20 to "stop protectionism in its tracks and make sure we keep trade open", said Mr Cameron.

It was an "international embarrassment" that the world had still not agreed a liberalised trade regime, almost a decade since the launch of the Doha development round in 2001.

And he backed a free trade area covering the whole of Africa, which could help spur development in the continent in the way that trading between impoverished east Asian states did following the Second World War.

"We're going to have to make a big argument that trade is good for everybody," said Mr Cameron.

"We need to deal with this idea that export success for one country is a disaster for other countries. Trade isn't a zero-sum game."

The summit's final communique, due for publication tomorrow, will be pored over for indications of how willing the G20 leaders have been to commit themselves to the kind of co-ordinated approach which they were ready to adopt at the height of the crisis.

Mr Cameron held a series of bilateral meetings with fellow-leaders, including South Korea's President Lee Myung-bak, Russian President Dmitry Medvedev and Indian Prime Minister Manmohan Singh, in the run-up to the official opening of the summit.

He voiced "solidarity" with President Lee in his country's long-running stand-off with Communist neighbour North Korea, and restated Britain's desire for Pyongyang to engage with six-nation talks designed to ease tensions.