G7 pledges to nurture global growth

The Group of Seven top economies is committed to "nurturing" world economic recovery, British Chancellor of the Exchequer George Osborne said on Saturday after a meeting of the international body that also pledged to further slash countries' huge 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."

Mr Osborne was speaking after a two-day informal meeting of G7 finance ministers and central bankers aimed at striking a balance between supporting fragile economic recovery and slashing government debts.

He said the discussions had revealed more areas of agreement between the member states than is assumed, amid pressure from the United States for Europe to scale back deep austerity measures.

He also told reporters after the talks in Aylesbury, north-west of London, that 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 G8.

The G7 comprises Britain, Canada, France, Germany, Italy, Japan and the US. The G8 is the G7 plus Russia.

The Aylesbury gathering, also attended by top representatives from the European Union and International Monetary Fund, built on last month's Group of 20 meeting while looking ahead to next month'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."

The IMF, while welcoming government efforts to reduce spending, has urged Britain to lessen the pace of its austerity program to support the country's fragile economic recovery.

Meanwhile on Friday, US Treasury Secretary Jacob Lew said the world's biggest economy feels "strongly there needs to be the right balance between austerity and growth", amid accusations that Germany has forced heavily indebted eurozone colleagues such as Spain and Italy down a path of deep spending cuts.

The G7 gathering also took place against a background of renewed market focus on currency wars after the yen on Friday hit its lowest point against the US dollar in more than four years.

Mr Osborne said the G7 had reaffirmed its commitment made in February 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 US dollar this week vaulted past the key ¥100 barrier for the first time since October 2008, as Tokyo's aggressive stimulus efforts to lift the 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 on Friday, when the US currency traded as high as ¥101.98.

Elsewhere, US and Frankfurt sharemarkets surged to record highs this week after positive economic data from the US and Germany.

Federal Reserve chairman Ben Bernanke, who did not attend the meeting, sounded a note of caution on Friday about the record-setting rise on Wall Street as the Fed holds its near-zero key interest rate and pumps $US85 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 noted on Saturday: "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."