They may be a G8 but they seem at sixes and sevens
Christina
TELEGRAPH 9.7.09
G8 summit: leaders warn global economy faces more danger
The global economy faces "significant" dangers in the coming months and a recovery from recession is still some way off, world leaders have warned.
By James Kirkup in L'Aquila
At the Group of Eight summit in Italy, the leaders of the richest countries said there could be worse to come before the situation improved.
The pessimistic statement came as the International Monetary Fund said the global economy would shrink slightly more than previously thought this year and that any recovery would be "weak".
Meeting in L'Aquila, Italy, G8 leaders issued a statement warning: "The economic situation remains uncertain and significant risks remain to economic and financial stability".
Despite seeing some signs of stabilisation in economies, the G8 listed rising oil prices, fragile banking sectors, falling trade and investment and rising unemployment as the main threats to a recovery.
Speaking after their talks on the economic outlook, leaders signalled they feared the world may not have seen the worst of the slowdown yet.
Angela Merkel, the German Chancellor, said: "The crisis is a long way from being over. If we are lucky, then we have nearly reached the bottom."
Gordon Brown, the Prime Minister, said: "There are warning signs about the world economy we cannot afford to ignore."
The G8's bleak outlook echoed warnings Mr Brown had made before the summit, when he said the world needed a "second wake up call" to avoid slipping into a second recession.
He said: "That wake up call is being heard loud and clear."
However, in a setback for Mr Brown, the G8 also agreed that advanced economies should start preparing an "exit strategy" for ending the debt-fuelled spending sprees many have launched during the downturn.
Britain had opposed any "exit strategy," with the Prime Minister arguing that it is "too early" to start discussing plans to cut spending and raise taxes.
On the other side of the debate, Germany has been arguing for swift action to start rebalancing budgets.
In a compromise, the G8 said that each country should decide the timing of its fiscal tightening "once the recovery is assured".
In its statement on "exit strategies," the G8 called for the IMF to help advise countries on how to go about cutting their deficits and rebalancing their budgets.
But Mr Brown angrily rejected suggestions that would give the IMF any involvement in British fiscal policy. "It doesn't mean interfering," he said.
[If confidence in the pound goes he may not have any choice in the matter -cs]
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