The G7 advanced economies smoothed over US-European differences at a weekend meeting on how to balance deep austerity measures with ways to support fragile growth.
G7 finance ministers and central bank governors also pledged on Saturday their commitment to tackling tax evasion on the second of two days of talks in the English countryside, British Chancellor of the Exchequer George Osborne said.
The G7 additionally vowed not to intentionally set out to weaken currencies, after the yen on Friday hit its lowest point against the US dollar in more than four years.
The US has put pressure on European nations to scale back their spending cuts amid fears they may harm growth, but Osborne said the meeting in Aylesbury, northwest of London, revealed much common ground.
“This meeting confirmed there are more areas of agreement between us on fiscal policy than is commonly assumed,” he told a press conference afterward.
He said the G7 had “discussed the importance of having in place credible, country-specific, medium-term fiscal consolidation plans for ensuring sustainable public finances and sustainable growth.”
French Minister of Finance Pierre Moscovici appeared to echo Osborne’s remarks.
“The consensus is gaining momentum in the way we balance support for growth and fiscal consolidation,” he told reporters.
“There is still a real will to reduce the deficits, but certainly there is a change of tone” among G7 members, Moscovici added.
Meanwhile, the G7 is committed to “nurturing” world economic recovery, Osborne said.
“Overall, our discussions over the past two days have reaffirmed that there are still many challenges to securing sustainable global recovery and we can’t take it for granted,” he said.
The talks, also attended by top representatives from the EU and IMF, built on last month’s wider G20 meeting while looking ahead to next month’s G8 summit in Northern Ireland.
The IMF has welcomed government efforts to cut spending, but also urged Britain to lessen the pace of its austerity to support the country’s fragile economic recovery.
The G7 also used its latest gathering to firm up its commitment to combating tax evasion and tax avoidance, which occurs when individuals and companies take advantage of legal loopholes.
“Today, we all agree on the importance of collective action to tackle tax avoidance and evasion,” Osborne said. “It is vital that both developed and developing countries collect the tax that is due to them.”
The G7 gathering took place against a background of renewed market focus on currency wars after the yen on Friday hit a new low against the US dollar.
Osborne said the G7 had reaffirmed its commitment made in February that its “fiscal and monetary policies have been and will remain orientated towards meeting” its members’ respective domestic objectives and “will not target exchange rates.”
The US dollar vaulted past the key ￥100 barrier last week for the first time since October 2008, as Tokyo’s aggressive stimulus efforts to lift the Japanese economy continue to depress its currency, helping boost demand for Japanese exports.
“We are not manipulating the foreign exchange market, but trying to come out of deflation,” Japanese Minister of Finance Taro Aso said on Friday, when the US currency raced as high as ￥101.98.