Barack Obama flew into Britain last night ahead of the G20 summit to face demands that world leaders make significant progress on financial regulation.
Angela Merkel, the German chancellor, and Nicolas Sarkozy, the French president, will throw down the gauntlet today by staging a joint press conference in London demanding the G20 summit usher in a new era of global regulation of banks, executive bonuses, hedge funds and
offshore tax havens.
In what will be seen as a challenge to Obama, they will also insist nobody at the summit should discuss a fresh stimulus package, despite a report from the Organisation for Economic Co-operation and Development that "world trade is now in freefall".
The expected Franco-German show of solidarity will come amid frantic rounds of diplomacy, starting with a joint press conference by Gordon Brown and Obama this morning, and culminating in a state banquet at Buckingham Palace tonight.
As Obama flew over the Atlantic, he phoned Brown from Air Force One and spent 15 minutes discussing differences between the G20 members and the prospects for a compromise.
Robert Gibbs, the White House press secretary, addressing journalists aboard Air Force One, said: "I think the call that he had with Prime Minister Brown demonstrated that they made progress on a number of issues."
Gibbs, adopting a concilatory tone, paved the way for what is likely to be a fudged compromise, a final communique vaguely addressing Obama's and Brown's wish for more government spending and Sarkozy's call for more financial regulation. He predicted "a very broad agreement on measures that have to be taken to address the global recession".
Michael Froman, the White House's deputy security adviser , also took a diplomatic approach, claiming he was unaware of Sarkozy's reported threat to walk out if French demands for tougher regulation were not met.
As world leaders flew into London last night, parts of the capital were being boarded up in preparation for demonstrations which leaders fear will overshadow diplomatic negotiations.
Marchers will take to the streets from 11am in an attempt to bring the Square Mile to a halt, raising concerns about the potential for violence on one side, and overly aggressive policing on the other.
Scotland Yard's Commander Bob Broadhurst and Chief Superintendent Ian Thomas, co-ordinating the security effort, held last-minute talks yesterday with the organisers of Climate Camp, the largest protest group. Its organisers say they plan to set up a "festival-like" camp at an undisclosed location in the City.
David Howarth MP, the Liberal Democrat justice spokesman, who mediated the meeting, said "channels of communication" had opened, but added: "I still think the two sides have different views on what's proportional."
Small bands of protesters are likely to attempt to occupy financial institutions and banks, many of which were boarded up this morning in preparation.
Obama was greeted at Stansted last night by the chancellor, Alistair Darling, who travelled to the airport on the Stansted Express from Liverpool Street.
The president was later flown aboard the Marine One helicopter to the US ambassador's residence in Winfield House, in Regent's Park. He then travelled in an armoured limousine, known as the Beast, to the American school nearby to address embassy staff. He was cheered by a crowd of about 150 lining the street.
Speaking before Obama arrived, Brown said it was the duty of the G20 to restore confidence in financial system. "Leaders meeting in London must supply the oxygen of confidence to today's global economy and give people in all of our countries renewed hope for the future," he said. He added that the summit should aim to save or create 20 million jobs.
The summit is happening against the grimmest possible backdrop, with the OECD forecasting that global trade volumes will slump by 13% this year. It predicted its member economies would shrink by an average 4.3%, with the US contracting by 4%, the eurozone by 4.1% and Japan by 6.6%. It forecasts Britain's economy will shrink by 3.7% – the worst performance since the second world war and Germany's to contract by 5.3%.
Britain has given up any suggestion of a further co-ordinated stimulus at this summit, but believes the OECD's growth forecasts underline the need to revisit the issue at a further G20 summit later in the year, likely to be in Asia.
Responding to media reports that he would walk out of the summit if leaders fail to make substantial progress, Sarkozy said he is "lucid" in the face of what he called "the forces of conservatism".
Brown was reported to be working hard to persuade the Chinese to contribute more to global institutions such as the IMF, in return for extra voting rights.
Hello, and cheerio
Over the next 48 hours the greatest prize in London will be face time with the world's most wanted man, Barack Obama. The first to win it was Alistair Darling, the chancellor, who was last night entrusted with welcoming the US president on his arrival at Stansted. Darling's coup was only slightly diminished by the fact that he almost certainly set a record - for the shortest ever high-level meeting with the president. Darling's moment lasted precisely two minutes, the time it took the First Visitor and his wife to walk from Air Force One to the Marine One helicopter that whisked him to central London.