G7 pledges its support for global recovery Economy Big deficits under attack
The Group of Seven top economies is committed to "nurturing" world economic recovery, British finance minister George Osborne said on Saturday after a meeting of the international body that also pledged to slash countries' public deficits.
"Overall, our discussions over the past two days have reaffirmed that there are still many challenges to securing sustainable global recovery, and we can't take it for granted," he said.
"But we are committed as the advanced economies in playing our part in nurturing that recovery and ensuring a lasting recovery so that we have prosperity in all our countries."
The Chancellor of the Exchequer was speaking after a two-day informal meeting in Aylesbury, north-west of London, of G7 finance ministers and central bankers aimed at striking a balance between supporting fragile economic recovery and slashing government debt.
Mr Osborne said the discussions had revealed more areas of agreement between the member states than was assumed, amid pressure from the United States for Europe to scale back deep austerity measures.
He said the G7 ministers had agreed on the "importance of collective action" to tackle tax evasion, which Britain has made a priority of its presidencies of the G7 and the G8.
The G7 is Britain, Canada, France, Germany, Italy, Japan and the US. The G8 adds Russia.
The Aylesbury gathering, also attended by representatives from the European Union and the International Monetary Fund, built on last month's Group of 20 meeting while looking ahead to June's G8 summit in Northern Ireland.
Mr Osborne said the G7 had "discussed the importance of having in place credible, country-specific, medium-term fiscal consolidation plans for ensuring sustainable public finances and sustainable growth".
"This meeting confirmed there are more areas of agreement between us on fiscal policy than is commonly assumed," he said.
The IMF, while welcoming government efforts to reduce spending, has urged Britain to slow its austerity program to support the country's fragile economic recovery.
On Friday, US Treasury Secretary Jacob Lew said the world's biggest economy felt strongly there needed to be "the right balance between austerity and growth", amid accusations that Germany forced heavily indebted eurozone colleagues such as Spain and Italy down a path of deep spending cuts.
The G7 gathering took place against a background of new market focus on currency wars after the yen on Friday hit its lowest point against the dollar in more than four years.
Mr Osborne said the G7 had reaffirmed its February commitment that its "fiscal and monetary policies have been and will remain orientated towards meeting" its members' respective domestic objectives and "will not target exchange rates".
The dollar vaulted past the key 100-yen barrier for the first time since October 2008, as Tokyo's stimulus efforts to lift the Japanese economy continue to depress its currency, helping to boost demand for Japanese exports.
"We are not manipulating the foreign exchange market but trying to come out of deflation," Japan's Finance Minister, Taro Aso, said when the US currency raced as high as 101.98 yen.
US and Frankfurt markets surged to record highs after positive economic data from the US and Germany.
Federal Reserve chairman Ben Bernanke, who did not attend the G7 meeting, sounded a note of caution about the record-setting rise on Wall Street as the Fed holds its near-zero key interest rate and pumps $US85 billion ($A84.62 billion) a month into bond purchases to support a weak economic recovery.
"In light of the current low-interest rate environment, we are watching particularly closely ... forms of excessive risk-taking," he told a Chicago Fed conference.
Mr Osborne said: "Financial market sentiment has improved and there are signs that this is feeding through to an improved outlook in some of our economies. However, we all agreed that growth prospects remain uneven and we can't take the global recovery for granted."