HUNTSVILLE, Ontario (Reuters) - Group of Eight leaders have agreed on the need to stay focused on immediate growth goals while tackling public finances “going forward,” a senior U.S. official said on Friday.
“There is a broad consensus among the G8 leaders, a convergence of views, if you will, as they head into the G20, about how to maintain durable growth while also reaffirming, of course, the common shared commitments to fiscal consolidation going forward,” the administration official told reporters.
The official, briefing reporters on the sidelines of the G8 summit at a wooded lakeside resort north of Toronto, spoke on condition of anonymity.
U.S. President Barack Obama has called on his partners in the broader G20, which includes advanced economies and emerging economic powerhouses like China and India, to keep focused on growth to ensure a self-sustaining recovery.
That pits the United States against some major countries in Europe, where a debt crisis sparked by Greece has prompted a drive for austerity in public finances that Washington fears is premature.
“The president reiterated his strong belief that we need to maintain durable growth in the global economy. ... (Obama) underscored that a part of a growth strategy includes fiscal consolidation and deficit reduction, particularly in the medium term,” the official added.
The G8, which groups the United States, Germany, Japan, Russia, France, Britain, Canada, and Italy, is a chance for Western powers to gather around a common position before entering the broader and less manageable G20, which has supplanted it as the prime body to steer the world economy.
Obama’s own goal of having U.S. fiscal policy keep pumping up jobs and growth has been thwarted by the U.S. Senate, which has declined to pass additional measures to maintain aid to cash-strapped states and the long-term unemployed.
U.S. lawmakers worry about the country’s record deficit and rising debts, mirroring concern in Europe where taxpayers are unhappy about a massive public bailout to protect the euro common currency from fallout over the Greek problems.
The Obama administration argues that measures to ensure an economic recovery stays on track will be fiscally prudent in the long run, by raising employment and boosting tax revenue.
The administration also fears repeating the mistakes of the 1930s’ Depression, when policy was tightened too early to satisfy the economic orthodoxy of the day to get public debts in order. It has brought that message to Canada.
“There was a consensus as related to the relationship between growth and fiscal consolidation in the medium term, but that we also need to maintain our immediate efforts to ensure durable growth,” the U.S. official said.
Editing by Peter Cooney