Cameron cautions world leaders over risks of 1930s depression

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 International Monetary Fund, 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 formally opened last night – have been dominated by anxieties over protectionism and "currency wars".

United States President Barack Obama has indicated concern that Beijing is keeping its currency, the yuan, artificially low in order to boost its exports but America has sparked anger from G20 states including China and Germany for its $600bn round of quantitative easing, which some see as an attempt to drive down the value of the US currency for the same reason.

Mr Obama, who arrived in Seoul 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."

The G20 summit also gave Russian President Dmitry Medvedev the opportunity to invite the Prime Minister to his country. Mr Cameron will visit Russia next year and said the two men each agreed that they wanted to "strengthen the bilateral relationship" between the UK and Russia.

He described their face-to-face talks on the fringes of the G20 gathering as "all in all a very positive meeting".

The visit to Russia will be Mr Cameron's first as Prime Minister and appears to signal a thaw in relations which have been in deep freeze following the murder of Alexander Litvinenko, a prominent critic of Russian leader Vladimir Putin, in London in 2006.

Speaking after their meeting in Seoul, Mr Cameron said that he and Mr Medvedev shared views on economic issues like global trade imbalances. They also discussed the situation in Iran and North Korea and the upcoming summit between Russia and Nato.

Mr Medvedev said: "We're interested in seeing these relations grow and develop this year."

Tax urged on money moves

An alliance of 183 organisations from 42 countries issued a plea to world leaders to impose a Robin Hood-style tax on financial transactions.

Yesterday's letter is signed by health, education and environmental charities and unions from 16 of the G20 countries.

It says that a financial transaction tax would help meet the costs "of the global financial and economic crisis".