G7 summit ends in pessimism: Major 1% growth pledge - World trade pact delay - UK resists jobless talks - Yeltsin 'resources' offer

LEADERS of the world's seven richest industrial democracies failed yesterday to come up with any new assurances that the fragile economic recovery would be sustained beyond the claim that a world trade pact might be reached by the end of the year.

In Britain, where signs of recovery are the sparsest in the Group of Seven, John Major sought to reverse deepening pessimism by promising growth 'of up to 1 per cent' this year. His comments in Munich at the end of the G7 summit seemed intended to dispel reports that unpublished Treasury forecasts warn of another year of economic decline.

One finance minister described Britain's contribution to the final communique as 'very blase', adding: 'This is strange, as the situation in Britain is the worst of all.'

For the first time, the summiteers included explicit references to the need to bring down mounting unemployment. President Francois Mitterrand said this marked a departure from purely economic concerns to take account of social consequences.

Britain was said to have resisted any comprehensive debate about unemployment in the finance ministers' sessions. One minister said: 'The British tone was that this is all very nice, but since there has been no decision on Gatt (General Agreement on Tariffs and Trade), and no progress on interest rates, there is not much point in discussing unemployment.'

Despite a high-profile but unsuccessful initiative by Mr Major to force progress on world trade talks, France was said to resist him, preferring not to provoke recriminations from its farmers in the 20 September referendum on the Maastricht treaty.

The one consolation for the Prime Minister was the inclusion in the communique of his proposal that the G7 ratify their environmental commitments made at the Rio Earth Summit last month.

The summiteers admitted a successful trade round would make a 'significant contribution' to the world economy. The communique hoped that a 'balanced' accord - in which US and EC concerns about the depth of farm export subsidy cuts would be taken into account - was 'within reach'.

The conviction did not appear to be shared by Mr Mitterrand. And a defiant Mr Major promised that during the UK's EC presidency he would 'bully, and badger, cajole and encourage the negotiators' to reach an accord.

On the prospect of lower European interest rates, the communique offered little hope of early relief. Scope for lower rates would be created once excessive budget deficits - a reference to Germany and Italy - were brought down. In a further allusion to Germany, the G7 said that as 'the risk of inflation recedes . . . it will be increasingly possible for interest rates to come down'.

Several leaders, including Mr Major, believed that world recovery would be underpinned by an emerging US expansion and Japan's assurances that it might boost public spending in the autumn. But the communique was starker about the outlook for recovery, saying: 'We will not take it for granted.'

Assertions by Nicholas Brady, the US Treasury Secretary, that German interest rates were set to fall and dollar stability was assured, provoked deep unease in financial markets. The dollar finished lower again yesterday and looks set to test its historic lows against the German currency. Sterling fell in the dollar's wake.

Despite the absence of any measures to bolster the recovery, the Seven were careful to avoid acrimonious exchanges.

All the leaders sought to blame investors, consumers and savers for any flagging confidence in better economic times. They limply committed themselves to resurrect confidence with unspecified actions. A finance minister said: 'In the economic field, 50 per cent is pyschology. Our duty is to give together this positive measure so that all take note. People always ask governments what they, the governments, are doing for growth. Perhaps the consumer should ask himself 'What do I do for growth?'