G8 summit: What will world leaders propose?

Hollande plan – The new French president wants to reverse the austerity measures and boost growth by taxing the rich more and spending more. His election manifesto had echoes of Labour’s proposals, except he wants a new 75 per cent rate on the wealthiest. He also wants to reform the EU institutions and crucially wants the European Central Bank to be the lender of last resort. He backs relaxing austerity measures on the weaker southern economies, including Greece.

Cameron plan – The Prime Minister is telling the eurozone countries that austerity is the only choice, warning the problem is a debt crisis where the debt needs to be reduced to put in the foundations for growth. However, he also wants the European Central Bank to become a lender of last resort, as the Bank of England is for the pound. This, he believes, could still calm market fears on European banks and national economies and stop a collapse.

Merkel plan – the German chancellor wants to continue on the same path already being followed. The EU’s biggest economy underpins the eurozone and is the principal financial backer to the southern economies. Domestically, she cannot go back on her calls to insist the Greeks and others make cuts in exchange for bail-out money. She may agree to find more money for austerity in southern economies, but is deeply opposed to reforming the ECB.

Greek exit – None of the main leaders is publicly saying whether Greece should leave the euro. But if elections again see the anti-austerity parties in the ascendency and another failure to form a government, or worse, one which will ignore the deal for bail-out money, then it will be forced to go. Some believe Greece should be asked to leave now to limit the damage. There are fears, though, that this will speed up the contagion and lead to other countries being forced to leave the euro, led by Italy, Spain and Ireland.