Europe pushes for solutions
Aylesbury – Arabstoday
The Group of Seven top world economies wraps up talks Saturday aimed at striking a balance between supporting fragile economic recovery and slashing government debts, as the United States
pressures Europe to scale back deep austerity measures.
The two-day meeting in Britain comes amid renewed market focus on currency wars after the yen on Friday hit its lowest point against the dollar for more than four years.
The talks in Aylesbury, north-west of London, were attended by finance ministers and central bank governors from G7 states as well as top representatives from the European Union and International Monetary Fund.
The G7 -- Britain, Canada, France, Germany, Italy, Japan and the United States -- is building on last month's wider Group of 20 meeting, while looking ahead to next month's G8 summit in Northern Ireland.
Britain, this year's president of the G8 -- the G7 plus Russia -- is using the platform to also push for greater multilateral cooperation in tackling tax evasion.
The G7 meeting is followed Saturday by a series of press conferences involving ministers.
"Our task is to nurture the recovery," British Finance Minister George Osborne said Friday as he opened the gathering amid pressure on Britain and other indebted European nations to scale back deep cuts to state spending.
The IMF, while welcoming government efforts to reduce spending, has urged Britain to lessen the pace of its austerity programme to support the country's fragile economic recovery.
IMF head Christine Lagarde said on her arrival Friday that she was "looking forward to... good discussions on (economic) recovery.”
And US Treasury Secretary Jacob Lew said the world's biggest economy feels "strongly there needs to be the right balance between austerity and growth.”
"We've seen in the United States that scheduling the deficit reduction to come a little bit later has left us with a stronger economy," he told CNBC.
He added: "We're not arguing over whether or not we all have to get our fiscal house in order. We all need to get our fiscal houses in order.”
"I think the question is when and how... having European economies grow means they need to get the right balance."
The G7 meeting is taking place after US and Frankfurt stock markets raced to record highs this week following positive economic data out of the United States and Germany.
The dollar vaulted past the key 100-yen barrier for the first time in more than four years, as Tokyo's aggressive stimulus efforts to lift the Japanese economy continue to depress its currency, helping to boost demand for Japanese exports.
The dollar raced as high as 101.98 yen on Friday, touching a level last seen in October 2008.
"We are not manipulating the foreign exchange market but trying to come out of deflation," Japan's Finance Minister Taro Aso insisted on Friday.
EU Economic Affairs commissioner Olli Rehn said the G7 talks would focus on boosting economic growth rather than currency concerns.
"It is important that in line with previous (G20 and IMF) decisions... there is no talk about currency wars, (but) there is discussion about how to better coordinate our economic and monetary policies to support growth," he told reporters on his arrival at the gathering in the English countryside.
His comments come as central banks around the world were again cutting interest rates in a bid to lift growth.
Federal Reserve Chairman Ben Bernanke, who is not attending the G7, sounded a note of caution Friday about the recent record-setting rise in the US stock market as the Fed holds its near-zero key interest rate and pumps $85bn 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.