European leaders stepped up their drive Sunday for sweeping changes to the world financial order amid signs that the global economic crisis was gaining momentum, dpa reported.
Last November's meeting of Group of 20 (G20) leaders in Washington came in the wake of the shock about the scale of crisis facing the world economy.
Now, four months later Europe's major economies find themselves facing up to the threat of a major economic shakeout in the financial system in parts of Europe as they gear up for the next G20 summit in London in April.
But the European leaders and their G20 colleagues risked being overtaken by events as the global economic firestorm sweeping appears to be gaining force.
The risk now appears to be growing that the financial market could be deepening just as the global economic slowdown has resulted in a sharp fall in economic growth around the world along with accelerating unemployment.
New signs of the economic mood in Europe are likely to emerge this week with the release of a series of key economic indicators, including new jobless data as well as Germany's business confidence index and the European Commission's closely-watched economic survey.
Indicators published Friday point to the economic downturn gaining momentum across Europe with confidence in the 16-member eurozone manufacturing and services sectors slumping. Business confidence in France plummeted to its lowest level in more than 40 years, a survey released Friday said.
Moreover, the buildup to Sunday's EU leaders' summit in Berlin was accompanied by another round of turmoil in global financial markets with Eastern European markets in particular coming under renewed pressure amid concerns about the state of the region's banking sector.
Sunday's meeting of EU leaders in Berlin was called to help Europe's major economies prepare for the G20 summit and was hosted by German Chancellor Angela Merkel.
Speaking at a press conference following the Berlin summit, Merkel said the measures for tightening global market regulation were aimed at restoring market confidence.
But analysts are expecting further market turbulence as investors confront what is shaping up to be the biggest economic downturn since the Second World War.
Already the downturn has plunged Europe's key car industry into a major crisis as demand has plummeted with companies across several industries announcing production cuts and layoffs.
At the same time, worries have emerged about the pressures growing on the financial systems in parts of the eurozone, notably Ireland and Greece.
This in turn has helped to spark a debate about how Europe possibly being forced to mount a bail-out for member states badly hit by the global crisis.
However, the crisis in Central and Eastern Europe is threatening to undercut the gains achieved through the region's economic transformation from communism over the last 20 years.
"The crisis is clearly developing in an explosive fashion and there is a very clear risk of an Asian-style meltdown," Copenhagen- based Danske Bank warned in a letter to clients about the outlook for Central and Eastern Europe.
"The economies in the region are already in free fall and at least one country - Ukraine - is dangerously close to sovereign debt," the Danske Bank analysts said.
Moreover, the exposure of banks in western EU states such as Belgium, Germany and Austria raises risks for the euro, which slumped to a three-month low at one point last week.
Also last week, World Bank Europe and Central Asia chief economist Indermit Gill called on Europe to protect the gains made in Eastern Europe since the implosion of communism.
"Eastern Europe is being hit especially hard in these trying times," said Gill. "If the world turns protectionist, developing countries will find it difficult to protect these hard-won gains."
Acknowledging the sense of urgency facing world leaders as they attempt to press on with global financial market reform and moves to combat the international economic slowdown, the EU leaders stressed the need for the G20 to rapidly implement the changes to the financial system.
"It will be crucial after 2 April to maintain the pressure to implement these measures consistently and comprehensively," said the so-called chairman's summary, setting out the points of agreement at the summit in the Chancellor's office in central Berlin.
Either way, the reforms are likely to take some time to introduce.
In the meantime, the EU leaders could find themselves facing more immediate problems as they struggle to contain the fallout from the global financial and economic crisis.
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