European Union (EU) leaders and finance ministers have forged a plan aimed at driving forward an overhaul of the world financial system and tightening market regulation. At a mini-Summit, they agreed to “a common and powerful” position aimed at returning confidence in markets which would be presented to the April summit in London of the Group of 20 (G20) major economic powers, said the meeting’s host, German Chancellor Angela Merkel. “We need a new deal” to lay the foundations for the pickup in the world economy said British Prime Minister Gordon Brown, who will chair the London summit. Both Merkel and Brown were speaking at a press conference of the leaders following the summit in Berlin. In a chairman’s summary, setting out the points of agreement at the summit the EU leaders stressed the need for the G20 to implement “swiftly and completely” the 47-point action plan agreed to at the last G20 government chiefs’ meeting in Washington in November.

 Europe is keen that the momentum behind reform continues after the London summit, with the Berlin meeting proposing measures to strengthen worldwide financial market regulation and to extend the global regulatory net. But the meeting came after more global market turmoil, which has underscored mounting concerns about the deepening sense of crisis surrounding the financial systems in Central and Eastern Europe (CEE) as well as parts of the 16-member eurozone, notably Ireland and Greece. At one point, the Euro hit a three-month low against the dollar with share markets slumping sharply as the Eurozone confronts its first major crisis since it was formed about a decade ago. “There has not been a worldwide recession of the scale we are seeing today for several decades,” the chairman’s statement said. But the leaders attending the summit also expressed optimism about the European economic outlook as the year unfolds following the adoption of national stimulus packages.

“As these measures take effect over the coming months they will tangibly support growth,” the statement said. Also attending the meeting was Dutch Prime Minister Jan Peter Balkenende and Italian Prime Minister Silvio Berlusconi. Spanish Prime Minister Jose Luis Rodriguez Zapatero told reporters that Washington meeting was for planning how to revamp the global financial structure, while London was where the leaders would take decisions. “We cannot fail in London,” said France President Nicolas Sarkozy at the press conference, who described the Berlin meeting was a step between London and Washington. In the meantime, the leaders have proposed creating “early warning mechanisms” to face up to financial firestorms in the future and to be coordinated by a strengthened International Monetary Fund (IMF) and Financial Stability Forum (FSF.) The EU leaders also believe that bodies such as the IMF have a role to play in shoring up European states facing financial pressures.

As part of the efforts for enhancing coordination between national supervisory authorities, the EU leaders have proposed doubling state funds for the IMF with the World Bank and the European Bank for Reconstruction and Development broadening their lending practices. The European leaders also want to ensure greater financial market transparency and accountability by ensuring that no market, product or market participant remains outside the regulatory net, including hedge funds and rating agencies. They said they also want to prevent “excessive risk taking” through controls on bonus payments and a crackdown on tax havens as well acting against the threats posed by protectionism and global warming. The summit also adopted a proposal drawn up by Merkel for the G20 to back a new charter aiming at ensuring sustainable economic growth. Also attending the gathering in Merkel’s Berlin office was the Czech Republic’s Prime Minister Mirek Topolanek. Prague currently holds the EU’s six-month rotating presidency.