EFFORTS to “nurture” economic revival were discussed by G7 finance ministers at the start of their UK talks, as Chancellor George Osborne said signs of improvement “cannot be taken for granted”.
The two-day meeting of industrialised nations got underway yesterday, and will initially focus on the global recovery.
“The good news is that some stability and confidence has come back into the global economy but we have got much more to do,” the Chancellor said at the Buckinghamshire country house which is hosting the gathering.
“For Britain, we know, as we have seen over the last few years, that we are very affected by what happens in our neighbours and I’m absolutely determined to focus on nurturing the recovery and not taking it for granted and that’s what we are going to do here today.”
Britain holds the chairmanship of the group and Mr Osborne urged a focus on “the three pillars of monetary activism, fiscal responsibility, and structural reform”.
Discussions today will delve into structural policy areas, including implementing global commitments to end the “too big to fail” flaws in the banking system and tackling tax evasion and avoidance.
Work will also continue on breaking down global trade barriers, with the Chancellor insistent that free trade agreements with the EU and India and Canada can be completed this year.
No details have been released about the talks, which Mr Osborne has sought to make an informal occasion with no final communique.
He said he recognised the larger G20 group, which includes emerging economic powers such as China, India and Brazil, was now the “primary economic forum for setting the global rules of the game”, but insisted the G7 nations – the United States, Germany, Japan, the UK, Italy, France and Canada – still wielded “major economic firepower” as they represented around half the global economy between them.
“We have shown political will to tackle problems at home and I believe the UK is further along that road than many,” he said.
“Now we can together show the political will to nurture global economic recovery. We have more in common than separates us. The G7 can be a catalyst for collective action to the benefit of all.”.
Mr Osborne acknowledged that debt and deficit levels “are too high” in the UK, as well as other G7 economies and called for fresh resolve to tackle the problem.
His strategy is likely to be boosted by the latest official data from the construction industry which suggest the UK’s double-dip recession never happened.
Until now, Britain is believed to have fallen into recession for a nine-month period from the last part of 2011 to the middle of 2012, following on from the deep recession of 2008 to 2009.
But economists have become increasingly doubtful about it, particularly since the change in gross domestic product (GDP) in each of the first two quarters was only a marginal fall of 0.1 per cent.
The GDP estimates produced by the Office for National Statistics (ONS) take into account the impact of various sectors of the economy on the whole of the UK, but are subject to revision.
Latest figures show the construction sector did not fare quite as badly in the first quarter of 2012 as previously believed. Instead of output declining by 5.4 per cent, it fell by 5 per cent.
The revision is believed to be enough to ensure that instead of falling by 0.1 per cent, GDP remained unchanged in the first three months of 2012.
Since a recession is defined as two successive quarters of decline, this would technically mean the double dip never happened.