G8 focus on containing euro zone contagion
Camp David, May 20, 2012
Group of Eight leaders stressed in their Saturday discussions the need for European countries to minimise contagion from the euro zone's economic crisis through both fiscal consolidation and growth, a senior White House aide said.
Michael Froman, an official with the National Security Council, said the G8 leaders were not divided over whether to pursue austerity or spending, saying they noted the importance of balancing the two.
"A number of leaders talked about ideas they could pursue in the context of their structural reform and other growth-oriented agendas," Froman said.
Another White House official, Ben Rhodes, said President Barack Obama would hold a bilateral meeting with German Chancellor Angela Merkel at Camp David after the conclusion of the G8 and before Obama heads to Chicago for the Nato summit.
Obama and Merkel also spoke informally on the sidelines of the G8 sessions Friday evening as well as Saturday, Rhodes said.
Meanwhile, British Prime Minister David Cameron urged countries to put in place strong contingency plans to deal with fallout from the euro zone debt crisis as fears grow that Greece could be forced out of the European single currency.
Cameron, speaking at the G8 summit, also appeared to hint that the European Central Bank should follow the example of the Bank of England by embarking on an asset purchase program to try to boost the economy.
"What is required is a sense of urgency and then clear actions for strong banks, strong deficit reduction plans, strong governance and strong contingency plans for whatever might happen," Cameron told reporters, setting out what he believes must be done to tackle the euro zone crisis.
Cameron has stepped up his warnings this week that the euro zone needs to act swiftly to solve its debt crisis, saying on Thursday that Greece was "on the brink" and the survival of the euro was in question.
British officials are deeply worried about the impact that a breakup of the euro and a further deterioration of the euro zone crisis could have on Britain's recession-hit economy.
Britain is outside the euro zone but about 40 percent of its exports go to the single currency bloc.
After talks on the economy with Obama while both leaders worked out at the gym, Cameron said he detected a "growing sense of urgency that action needs to be taken" on the euro zone crisis.
"We are addressing here the two biggest threats to all our economies and that is of course the euro zone crisis but also the very high oil prices that translate into high prices at the pumps and we are making progress on both," he told reporters.
Cameron appeared to call on the ECB to take a more accommodative monetary stance to lift growth in the euro zone. "Clearly, just as Britain benefits from a strong government with a strong deficit reduction plan and strong banks but also an independent monetary policy giving us low interest rates, helping to push demand in the economy, so the euro zone I believe needs that approach as well," he said.
A government source said Cameron's comment was a veiled suggestion that the ECB should copy the quantitative easing program followed by the Bank of England.
The Bank of England has bought 325 billion pounds ($520 billion) of government debt with newly created money to try to boost Britain's ailing economy.
The ECB has taken its own crisis measures to avert a financial meltdown in the euro zone, putting more than 1 trillion euros ($1.3 trillion) of low-cost, three-year funds into the banking system since the end of December. - Reuters