G20 action is no quick fix for slump, admits Darling

Alistair Darling admitted today that there would be no "overnight fix" to the recession as questions remained over banks' toxic assets and the size of the global economic stimulus.

In marked contrast to the Prime Minister's grand rhetoric yesterday about a "new world order", the Chancellor said it would take time for the measures to be felt by ordinary voters.

As Gordon Brown, Barack Obama and others headed from London to Strasbourg to mark the 60th anniversary of the Nato alliance, critics suggested that the $1trillion stimulus claimed by the Prime Minister was made up of only $350billion of new money and that much would never actually be spent.

As focus switched from economics to tackling terrorism and the future of Afghanistan, the Conservatives warned that Mr Brown had to show how yesterday's grand deal translated into the daily lives of British voters.

Before flying to France, President Obama also suggested it would take time for the G20 package to be implemented. He warned that sluggish bureaucracies and corruption could hinder attempts to emerge from the world downturn.

A leading economist pointed out that the "urgent problem" of toxic bank assets remained untouched in the G20 summit and that there were signs of the American Congress setting back moves to improve transparency.

UBS chief economist George Magnus said the G20 did little to tackle the issue of the estimated $1.3trillion of "bad" loans held by banks across the globe.

Even as the London summit deal was being signed yesterday, Congress bowed to pressure from Wall Street bankers and changed the rules to allow firms to put their own price on the scale of the toxic loans. The Federal Accounting Standards Board will allow banks to hide what critics say is the real scale of their losses.

Mr Darling said the deal would help British jobs and family finances, even though he was cautious about its possibilities. He told BBC Radio Four's Today programme: "You cannot oversell what happened yesterday, neither can you undersell it."

Shadow chancellor George Osborne said the Conservatives would have to clear up Labour's economic mess long after G20 had left town. Referring to a lack of new money for "fiscal stimulus", he said "the great thing missing from this communiqué is the one thing the Prime Minister lobbied hardest for".

Mr Osborne said the $1trillion being trumpeted comprised loans, credit lines and guarantees, but there was not "a single dollar or a single pound of additional fiscal stimulus".

Critics also pointed out that a chunk of the $1trillion was credit lines to rich nations, including the US, which were unlikely to need the money. Out of the $250billion pledged for trade finance guarantees, less than $25billion was made up of new commitments. The main source was the $100billion for aid for the poorest nations.

The global summitry continued today in Strasbourg as French President Nicolas Sarkozy hosted the Nato gathering amid tensions over Afghanistan.

Mr Brown faced pressure to send more troops as Mr Obama's call for military allies to pull their weight was set to dominate the two-day event.

France - which takes on full Nato membership during the summit after four decades on the fringes - and Germany are also being pressed to increase their contributions.

Strasbourg has been in near-lockdown in the run-up to the summit amid anti-Nato protests. Riot police using rubber bullets and tear gas arrested more than 300 people overnight following disturbances. Some 2,000 troublemakers wearing head scarves and ski masks fought running battles with officers.

As 26 world leaders headed for the city in eastern France today, Russia and the US moved to cut their number of nuclear warheads. Mr Obama and Russian President Dmitry Medvedev announced they aimed to reach a new deal on reducing nuclear arms by the end of the year.