G8 leaders agree to pretend

Lets all pretend that everything is all right – all we need is a little growth!

G8 leaders seek growth and urge Greece to keep euro

G8 LEADERS pushed for Greece to stay in the euro area and supported boosting growth, even as an increasingly isolated Germany said Europe could not spend its way out of the debt crisis

the Age,

21 May, 2012

Faced with differences between Europe and the US, and among European governments over the crisis response, the eight leading industrial economies admitted at President Barack Obama's Camp David retreat outside Washington ''that the right measures are not the same for each of us''.

''We agree on the importance of a strong and cohesive eurozone for global stability and recovery, and we affirm our interest in Greece remaining in the eurozone while respecting its commitments,'' the leaders' statement said.

German Chancellor Angela Merkel was on the spot at the Camp David summit as she faced growing pressure to shift her austerity-first approach after three years of a prolonged crisis that is affecting financial markets.

French President Francois Hollande found an ally in Mr Obama for his resistance to the German-led drive for balanced budget and debt reduction, which have set off a political and popular revolt against austerity in Greece.

''The direction the debate has taken recently should give us confidence,'' Mr Obama said. ''Europe has taken significant steps to manage the crisis. And there's now an emerging consensus that more must be done to promote growth and job creation right now in the context of these fiscal and structural reforms.''

Dr Merkel, whose crisis policy has helped keep her Germany's most popular politician ahead of elections next year, sought to draw a line in the sand. Referring to public spending to counter the financial crisis that broke out in 2008, she said: ''Everyone agreed that these kinds of stimulus program can't be repeated right now.''

Curbing public deficits and boosting growth ''are two sides of the same coin'' and ''shouldn't be played off against each other'', she said.

Dr Merkel came to the summit as the European leader who had demanded austerity as the most important step towards easing the eurozone's debt crisis. But the election of Socialist Francois Hollande as president of France, and Greek elections that created political chaos in the country, were clear rejections of the belt-tightening Dr Merkel represented.

Dr Merkel said growth and deficit-cutting reinforced each other and that everyone around the table agreed. ''That is great progress,'' she said.

As for promoting growth, she said investments under consideration included research and development, internet networks and infrastructure. But she said:

''This doesn't mean stimulus in the usual sense.'' Mr Hollande said he put forward France's objective to put growth ''at the heart'' of the discussions.

The threat of a Greek exit from the 17-nation euro economy loomed over a gathering of some of the world's most influential leaders discussing ways out of the revived debt crisis.