‘EU must focus on economic growth’

THE United States was yesterday to push Europe to focus on encouraging economic growth rather than slashing budgets as world leaders gathered for G8 and G20 summit talks.

US President Barack Obama arrived in Toronto with a strong hand, just hours after American lawmakers reached a compromise deal on sweeping financial reforms aimed at preventing another global meltdown.

As he left for Canada, Obama said he hoped the talks would build on “efforts to promote economic growth, to pursue financial reform, and to strengthen the global economy”.

“We need to act in concert for a simple reason: This crisis proved, and events continue to affirm, that our national economies are inextricably linked.”

After a marathon 20-hour debate in Washington, the House of Representatives and the Senate agreed to the deal on Wall Street reforms.

Obama could sign the bill into law as early as next week, but, in a sign that recovery from recession is still slow, the world’s largest economy posted lower than expected growth, revising its figures down to 2.7%.

The vote was a boost for Obama as Group of Eight leaders from the world’s richest nations gathered yesterday in an exclusive lakeside resort in Huntsville, Muskoka, in the forests north of Toronto.

In back-to-back summits, amid tight security, G8 leaders then join up with other members of the Group of Twenty developed and emerging nations for two days of talks in Toronto.

The US has expressed concern about the speed at which European nations, particularly Germany, are withdrawing stimulus spending put in place after the global financial crisis.

“Our job is to make sure we’re all sitting there together to focus on this challenge of growth and confidence, because growth and confidence are paramount,” US Treasury Secretary Tim Geithner told the BBC.

Europe “can make a choice to put in place the reforms and policies that will provide the possibility of stronger growth rates in the future”, he said.

But as thousands of officials, journalists and activists descended on eastern Ontario province, Geithner sought to play down any dispute with Europe, saying the two “have much more in common than we have differences”.

A spokesman for British Prime Minister David Cameron also said there was no transatlantic rift.

Obama is “very clear that we need to be putting the global economy on a sustainable path to recovery and I think it’s something we would agree with him completely on”, the spokesman insisted.

US leaders “recognise that in countries such as ours with particular deficit problems there’s a case for accelerating the rate of fiscal consolidation and I think that will be something that the G20 will recognise too”.

Budget cuts have become a pressing issue in Europe since the Greek debt crisis, and because of risks of similar problems in other eurozone countries.

German Chancellor Angela Merkel has argued in favour of the German model of deficit cutting and disciplined public finances.

French prime minister Francois Fillon said businesses and consumers would fear uncertainty and tax rises if France did not show determination in fighting overspending, and could then stop spending, posing a danger for growth.

“Everyone agrees those deficits have to come down over time to a level that’s sustainable,” Geithner said.

The G8 talks also planned to tackle global security and development, with six African leaders to join the talks.

Nigerian President Goodluck Jonathan told journalists he would raise concerns about the dumping of small and light weapons in Africa, calling arms proliferation “one of the things that disturbs me most”.

Brazilian President Luiz Inacio Lula da Silva, meanwhile, cancelled his planned trip to Canada due to floods in the north-east of Brazil.