Source: FT.com

Evidence of global economic turmoil mounted on Thursday as leaders of the G-20 group of nations began to arrive in Washington for this weekend’s summit.

Germany plunged into recession after a steeper-than-expected 0.5 per cent fall in economic activity in the third quarter, new data showed. In the US, the government said the number of workers filing new claims for unemployment benefits rose last week to 516,000, its highest level since 2001. Meanwhile, China revealed that its industrial growth hit a seven-year low.

Against this backdrop, US President George W. Bush, host of the summit, delivered an impassioned defence of the free market system, serving warning that his administration would resist efforts to impose heavy-handed regulation on global financial markets.

The outgoing US president vowed to support efforts to bring greater stability and transparency to the troubled financial system but warned it would be a “terrible mistake” to allow “a few months of crisis” to undermine faith in free market capitalism.

“While reforms in the financial sector are essential, the long-term solution to today’s problems is sustained economic growth,” he told an audience in New York. “And the surest path to that growth is free markets and free people.”

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