Nov. 14 (Bloomberg) -- A two-day summit on the global economic crisis begins today in Washington with world leaders likely to agree on little more than trying to spend their way out of a global recession.

The Group of 20 heads of state are divided on what needs to be done after that. European leaders want greater state controls over financial markets. President George W. Bush, who hosts a dinner at the White House tonight, takes a narrower view.

Increased government spending is something most of the industrialized and developing nations that form the G-20 are already planning to do. Any shift toward substantive change to the international financial system will probably wait for another meeting after President-elect Barack Obama takes office.

``The most realistic outcome is an agreement to start putting in place principles for reforms, and then agree to meet again,'' said Brad Setser, an economist at the Council on Foreign Relations and former U.S. Treasury official.

Leaders of the G-20, who represent almost 90 percent of the world economy, are feeling pressure with stock markets tumbling and economists forecasting the deepest global recession in three decades.

Deteriorating Economies

Statistics published within the last 24 hours showed deterioration in economies around the world. The 15-nation euro area fell into its first recession in 15 years; retail sales in the U.S. fell by the most on record in October; and Chinese industrial production gained last month at the slowest pace in seven years. The Organization for Economic Cooperation and Development yesterday predicted the economies in its bloc of 30 rich nations would contract next year by 0.3 percent.

The U.S. president invited the G-20 leaders to Washington for their first-ever summit in response to calls from French President Nicolas Sarkozy and U.K. Prime Minister Gordon Brown for a discussion of the causes and possible cures of the financial crisis.

Bush's European guests want a more international approach to market regulation with curbs on executive pay and hedge funds as well as greater cross-border supervision of banks.

German Chancellor Angela Merkel today said she'll do ``everything to ensure that there are more rules to prevent us from ever having to face such a situation again.'' Sarkozy said in Nice, France, that governments ``must change things permanently, structurally and strongly.''

`Global Map'

One possible compromise is adopting Brown's suggestion for a network of international regulators who meet to monitor banks that have interests in multiple economies. Merkel said she backs a ``global map'' to assess risks in the financial system and Bush agrees the G-20 ``must strengthen cooperation among the world's financial authorities.''

Bush remains averse to ``too much'' government meddling in markets, even after his administration backed bailouts of American International Group Inc. and Bear Stearns Cos. and began implementing a $700 billion rescue program.

``Government intervention is not a cure-all,'' Bush said in his weekly radio address, released by the White House before its broadcast tomorrow.

He has backing from Canadian Prime Minister Stephen Harper, who today said some of the European proposals are neither ``feasible or realistic.'' Speaking in Winnipeg, Manitoba, Harper said he'll push for a ``peer review'' mechanism to evaluate nations' financial rules.

Common Standards

The G-20 leaders will also consider common standards for accounting and creating centralized clearing houses for financial instruments such as credit default swaps, Bush said yesterday. He added ways will be sought to give developing nations more power within the International Monetary Fund and World Bank.

The IMF and the Financial Stability Forum group of regulators said today they will unite to conduct ``early warning'' exercises aimed at spotting future weak spots in economies and markets. Separately, Japanese Prime Minister Taro Aso's office said it will offer up to $100 billion in lending to the IMF at the summit and ask other nations to give further resources too.

That may leave Europe's leaders to take up a broader regulatory push after Obama's inauguration in January. The president-elect won't attend this week's meeting, sending former Secretary of State Madeleine Albright and former Republican Representative Jim Leach instead.

`Not an Event'

``This is a process and not an event,'' said Charles Freeman, an analyst at the Center for Strategic and International Studies in Washington.

That means results from these talks may be limited to agreement on common principles such as a desire to avoid protectionism and a pledge to take more steps to boost expansion. ``There should be no heightened expectations,'' Russian President Dmitry Medvedev said yesterday.

Interest-rate cuts by the world's major central banks have yet to unfreeze credit markets, leaving governments to step in with more spending and lower taxes.

``We have reached the stage where monetary policy must be accompanied by fiscal policy,'' Brown said today in New York.

China, the world's fourth-largest economy, last week announced a 4 trillion-yuan ($586 billion) stimulus plan, while Germany's Merkel is considering boosting her fiscal stimulus program from the 50 billion-euro ($62.6 billion) package endorsed by her Cabinet last week.

Stimulus Measures

Brown is signaling he'll cut British taxes soon and Aso promised Oct. 30 to pump 5 trillion yen ($51.8 billion) into his economy after a 1.8 trillion-yen supplementary budget was passed last month.

In the U.S., Democratic lawmakers are considering passing two stimulus measures, one during a so-called lame-duck session starting next week and another after Obama and a larger Democratic majority in Congress take office.

``Practically everyone agrees on the need for massive fiscal stimulus,'' said Julian Jessop, chief international economist at Capital Economics Ltd. in London. ``Agreement on reform of the global financial architecture will clearly be much harder.''

G-20 members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S., the U.K. and the European Union. The Netherlands and Spain will also be represented.

Others invited include International Monetary Fund managing director Dominique Strauss-Kahn, World Bank President Robert Zoellick and United Nations Secretary General Ban Ki-moon.

To contact the reporter on this story: Simon Kennedy in Washington at Skennedy4@bloomberg.net; Michael McKee in New York at mmckee@bloomberg.net

Last Updated: November 14, 2008 12:32 EST