G8 Camp David summit targets 'growth and stability'

 

US President Barack Obama: "All of us are absolutely committed... to achieve the kind of prosperity for our citizens that we're looking for"

The summit of the G8 group of major world economies is under way at Camp David, near Washington, with Europe's debt crisis expected to dominate.

US President Barack Obama said all the G8 nations were "absolutely committed" to the goals of growth, stability and fiscal consolidation.

Germany, which backs austerity, is under pressure from the US and France for stimulus measures, analysts say.

Greece's possible exit from the eurozone is high on the agenda.

The summit at the Camp David presidential retreat, in Maryland is being attended by leaders of the US, Germany, the UK, France, Italy, Japan, Canada and Russia.

'Sense of urgency'

UK Prime Minister David Cameron said a sense of urgency was needed to tackle the eurozone crisis. He called for strong banks and deficit reduction.

Analysis

The German government recognises that the situation in the eurozone has changed. The finance ministry, for example, now accepts that pro-growth concessions have to be made to the new president of France.

But that doesn't mean a change of the basic policy. As one official in Berlin said: "You don't get growth by running a bigger deficit." Rather, Berlin thinks existing European Union funds could be used more effectively.

At the same time, politicians in Berlin are now openly talking about Plan B, as they call it: Greece leaving the euro, which some of them think could be done without a financial catastrophe.

Chancellor Merkel denies telling the interim Greek government there should be a referendum there on the euro - but many in government circles now believe that the Greek election will be exactly that.

"There is a growing sense of urgency that action needs to be taken, contingency plans need to be put in place and the strengthening of banks, governments, firewalls and all of those things need to take place very fast," he told reporters at Camp David.

Answering a reporter's question during a group photo later, Mr Obama said there was "more work to do" before any decisions on the eurozone were reached.

BBC chief political correspondent Norman Smith, at Camp David, says that although the eurozone crisis is set to dominate the talks, Mr Cameron has made it clear the G8 cannot tell the eurozone what to do.

Mr Cameron held his bilateral talks with Mr Obama in a gym at Camp David, our correspondent says. It is understood that both men were on treadmills at the time.

Greece's caretaker government was sworn in this week after elections failed to produce a viable coalition to run the country. New elections have been scheduled for 17 June.

The result could determine the fate of austerity measures demanded by Greece's international creditors.

Two opinion polls published on Saturday showed the anti-bailout left-wing Syriza bloc neck and neck with centre-right New Democracy, both on about 25%.

Investors fear any refusal by Athens to impose deep spending cuts agreed under a bailout deal could result in the country quitting the bloc of 17 countries that use the euro.

Larger countries such as Spain or Italy struggling to ease their debt loads might then become vulnerable, potentially triggering wider eurozone upheaval and even a global financial crisis to rival the one of 2008.

In Frankfurt, where the European Central Bank (ECB) has its headquarters, thousands of protesters marched through the streets in a demonstration against the austerity policies of EU governments.

The demonstration, dubbed "Blockupy", was the only one not banned by local courts after Frankfurt expressed concern about the possibility of riots.

The office of the Greek interim prime minister said on Friday that Mrs Merkel had suggested the country hold a referendum on euro membership on election day, but the German chancellor's cabinet dismissed this as "false".

Crisis jargon buster
Use the dropdown for easy-to-understand explanations of key financial terms:
AAA-rating
The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is minuscule.

On Friday, G8 leaders also agreed that:

  • North Korea faced further isolation, if it "continues down the path of provocation"
  • Iran's government had the onus to prove the claim that its nuclear programme was peaceful
  • The UN-backed peace plan on Syria had yet to be fully implemented

After the G8 summit ends on Saturday evening, most of the leaders will decamp to Chicago to join a larger group of international officials for a Nato summit on Sunday and Monday, at which Afghanistan is expected to be the main item on the agenda.

Three men arrested in Chicago on suspicion of planning to throw petrol bombs at the Nato summit have been charged with conspiracy to commit terrorism and possession of an explosive or incendiary device.

 

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  • rate this
    -1

    Comment number 532.

    It's clear they haven't got a clue what their doing.

    What a bunch of misfits, the differences are clearer than their similarities.

    Each one is working to their own political time frames. Nothing to do with achieving long term stability.

  • rate this
    +13

    Comment number 120.

    Austerity can be positive: though not in need for cash, I started cycling everywhere to be "austere". I am healthier, slimmer, fitter and the petrol station sees me just once every two months. The money saved goes toward a nice film or theatre night. It is not that grim to live within your means. You do not need 24 different watches and all that bling. They tell you that you do but it's a lie...

  • rate this
    +18

    Comment number 66.

    The whole financial edifice is riddled with woodworm, dry rot, wet rot and built on sand. Too much was lent to borrowers who will never be able to repay. Greece can probably be written off Spain cant. Sooner or later the G8 will resort to printing money to inflate away the debt value and teach savers who stupidly failed to join in the credit binge a bitter lesson.

  • rate this
    +51

    Comment number 43.

    "potentially triggering wider eurozone upheaval and even a global financial crisis to rival the one of 2008"

    It's the same crisis that was never sorted! The massive bank bailout and austerity have done nothing. The global financial economy is now flooded with and paralysed by debt, mostly owed to the super rich orporations and big banks that caused the mess. More QE will end up in the same place

  • rate this
    +74

    Comment number 25.

    Save Greece and give them back the Olympics, forever!

    Help them build what ever infrastructure and stadia are necessary and then every 4 years the world governments pay, by way of entrance fee, whatever is needed to run it.

    This will save the obscene amounts wasted when choosing the next venue.

    Greece can be the world setting for true amateur sporting excellence and physical well-being.

 

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