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5:18pm UK, Saturday May 19, 2012
Barack Obama has pledged to work with Europe on a package that balances growth with debt reduction as G8 leaders meet to discuss the growing economic turmoil in Europe.
World leaders are meeting at the US President’s Camp David retreat for a summit where the deepening eurozone crisis is expected to dominate.
Mr Obama told the leaders it was important to stay committed to growth and fiscal consolidation, and that a balanced approach was needed.
“All of us are absolutely committed to making sure that both growth and stability, and fiscal consolidation, are part of an overall package in order to achieve the kind of prosperity for our citizens we all are looking for,” Mr Obama said.
After an early morning meeting with Mr Obama, Prime Minister David Cameron said he detected a “growing sense of urgency that action needs to be taken” on the crisis.
The G8 leaders at Camp David
“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,” he said.
“On all those things I think there’s a good sense of talks taking place and a good sense that action needs to follow.”
The G8 leaders are trying to find ways to restore confidence in global financial markets after worries about Spain’s banking problems and the risk of Greece leaving the eurozone sent world stocks to their lowest levels this year.
Sky News’ political editor Adam Boulton, at Camp David, said: “As was clear from Mr Obama and Mr Cameron there is a sense that the pressing crisis among the leaders is the eurozone and the possibility of a break-up involving Greece.
“That’s why the most interest at the end of the day will be what they say about the eurozone crisis.”
Before welcoming the leaders to the summit, Mr Obama met the newly-inaugurated Francois Hollande at the White House and backed his new French counterpart’s focus on economic growth.
Mr Obama said he was “looking forward to a fruitful discussion… about how we can manage a responsible approach to fiscal consolidation that is coupled with a strong growth agenda”.
Mr Hollande was sworn in earlier this week after coming to power on a promise of renegotiating the eurozone’s fiscal pact to focus on stimulating economic growth rather than austerity.
As world leaders seemingly began to question the austerity measures that have pushed Greece to the brink of leaving the eurozone, German Chancellor Angela Merkel, the architect of the tough cuts, looked set to be increasingly isolated.
Sky News’ Niall Paterson said that while Germany seems insistent on Greek austerity, the UK and France are taking a softer tone – but the G8 nations need to demonstrate unity of purpose.
He explained that while it would be difficult to come up with a solid plan before Greece’s election results are known, there still “needs to be a statement of the direction in which they wish to travel”.
He added: “Confidence is key when it comes to the financial markets.”
Earlier, as Mr Cameron met Mr Hollande, the two men agreed they “both want to see countries deal with their deficits and we both want to see economic growth”.
Mr Cameron told Sky News there was “no conflict between austerity and growth” and insisted he could work with the new French president.
However, there was no disguising the sharp difference over the issue of a financial transaction tax, which also formed a key plank of Mr Hollande’s election platform.
Read Sky’s Adam Boulton on the low hopes for the summit
“We are not going to get growth in Europe or in Britain by introducing a new tax that would actually hit people as well as institutions,” Mr Cameron said.
No major economic policy decisions are expected from the talks but Mr Obama will urge the Europeans to work harder at forging a comprehensive approach to the debt troubles.
In the initial discussion over dinner at Camp David, the G8 leaders agreed Iran must disclose more about its nuclear ambitions and that North Korea would face increasingly isolation if it “continues down the path of provocation”.
A move towards political transition in Syria was also discussed, according to officials.
The summit kicks off four days of intensive diplomacy – including a Nato meeting in Chicago – that will also focus on the winding down of the unpopular war in Afghanistan and food security.
Mr Hollande earlier told Mr Obama he would stick by his campaign pledge to withdraw French combat troops from Afghanistan by the year’s end, earlier than the alliance’s 2014 timetable.