G8 leaders upbeat on economic recovery

Published on 08/07/2009 22:02

THE world's major industrialised nations yesterday said the global economy was beginning to stabilise, while the International Monetary Fund said the world was beginning to pull out of a recession.

Leaders of the elite G8 club also warned however that "significant risks remain" although there were improved signs of consumer confidence.

At the Group of Eight summit in L'Aquila, Italy, leaders also managed to strike a historic deal to limit the rise of world temperatures to 2C or below and slash emissions of greenhouses gases by 80 per cent by the middle of this century.

They also agreed a joint statement on the economy, saying: "While there are signs of stabilisation, including recovery in stock markets, a decline in interest rate spreads, improved business and consumer confidence, the situation remains uncertain and significant risks remain to economic and financial stability."

The three-day summit began yesterday with a working lunch on the economy.

Leaders said they were committed to withdrawing stimulus spending, but only when a recovery looked secure.

"We agreed on the need to prepare appropriate strategies for unwinding extraordinary policy measures to respond to the crisis once the recovery is assured," the statement said.

Prime Minister Gordon Brown – who has been the main proponent of stimulus packages in contrast to the more cautious Germans – said countries should only drop the strategy once recovery was assured.

He said: "Everybody agrees with this language and everybody agrees we have got to be vigilant about what is happening to our economies and to the world economy."

The Prime Minister added that the G8 leaders would show that they are "prepared to take action" on threats to recovery, including rising oil prices, banks' reluctance to lend and moves towards protectionism.

However, the communique from the G8 was more cautious than an assessment from the International Monetary Fund.

In its latest World Economic Outlook, it said economic growth could hit 2.5 per cent in 2010, a more optimistic figure than the 1.9 per cent reported in April. This year, it said, the global economy is likely to decline 1.4 per cent, slightly steeper than the 1.3 per cent contraction it saw in April.

Leaders were more upbeat about their agreement in principle on the environment.

Mr Brown predicted that the deal would spark a global agreement at a United Nations summit later this year to eventually halve emissions by the middle of this century.

"We have agreed for the first time that average global temperatures must rise by no more than 2C. That is a historic agreement," he said.

The G8 had previously been unable to agree on that temperature limit – now set as 2C – as a political goal.

The agreement was reached thanks to the change of administration in the United States, with president Barack Obama committing to cut emissions to tackle global warming.

It remains only a target, however, with China and India not party to the agreement. The emerging powerhouses are upset that their richer counterparts, reneged on pledges to finance and transfer technology.

Mr Brown will hope to secure their agreement to limiting temperature rises to 2C at a meeting with China and India today.

Fashionista Brown joins the Silvio set after gift of 500 parka

IT WAS Tony Blair who heralded the Cool Britannia era when he invited Oasis guitarist Noel Gallagher to Downing Street, but Gordon Brown is set for a fashion makeover of his own at the G8 summit.

The Prime Minister was gifted a 500 limited-edition parka jacket – as favoured by Oasis stars Noel and Liam Gallagher and footballer David Beckham – by Italian prime minister Silvio Berlusconi.

US president Barack Obama was also among the world leaders to receive the gift, dubbed the "president parka".

The military-style jacket was designed in collaboration with Mr Berlusconi and has been signed by him. Measurements were estimated from pictures of the G8 leaders.

The jackets will go on sale after the summit, with a percentage of the profits going to the L'Aquila earthquake fund. L'Aquila was struck by a powerful earthquake in April that killed nearly 300 people.

Asked about the gift at a press conference, Mr Brown said he had not heard about it. It is understood he may not yet have opened his present.

Other gifts offered to G8 leaders include hand-made books weighing 53lb and gold coins representing an imaginary future world currency.

The books, commissioned by Mr Berlusconi from the Bologna-based art publishing house Fondazione Marilena Ferrari, have personalised dedications for each leader.

The coins, made by Belgian Luc Luycx, who designed one side of the euro coins, are called "eurodollars", in a symbolic call for a common currency to unite Europe and the United States.

The 28in by 17.5in Canova books were made at no cost by 23 Italian craftsmen using traditional techniques, the publishing house said.

The books' covers are decorated with white marble bas-reliefs and the volumes are bound with silk and gold thread. They include etchings and dozens of black and white photographs of Canova's artworks.