After a seven-hour meeting on Saturday, much of which was devoted to a subdued discussion of Europe's currency crisis, finance ministers and central bankers stated they would 'take appropriate additional actions to achieve sustained growth and greater currency stability'.
It remained none the less an essentially hollow statement, reflecting not only the paucity of options but also the fact that they were meeting before the outcome of the referendum was known.
It is understood that in the event of turbulence on the foreign exchanges today, some of the weaker currencies in the European Monetary System (EMS) would be devalued. There was no indication that the Seven were ready to repeat any more massive intervention to dampen currency market volatility. But some intervention was considered.
The Seven also discussed a comprehensive revamping of the structure of the EMS. That issue was a subject of more intensive discussion among European Community finance ministers last night, meeting to consider the results of the French referendum.
The Group also debated fiscal policy changes needed to bring about more stable currency markets. These included reductions in the huge budget deficits of the US and Germany, although no new proposals foraction were discussed. Italy's extraordinary deficit was also seen as a reason for market instability.
Although there was explicit acknowledgement of concern about the high level of German interest rates as a key factor behind the upheaval, ministers, including Norman Lamont, the Chancellor of the Exchequer, went out of their way to play down antagonism towards the German delegation. Theo Waigel, the German Finance Minister, himself acknowledged the need for conciliation. 'Blaming one side doesn't advance matters; it just leads to mistakes,' he told reporters after the meeting.
At the meeting, Mr Waigel repeated his own wish to see a lowering of German rates, but said this could only happen when the inflationary pressures of unification began to subside.
Despite the fact that in the days before the talks tempers flared, both the British and German delegations bent over backwards to present a more harmonious front. G7 officials said there was apprehension that any indication of discord might disrupt financial markets even more.
Both the Chancellor and Robin Leigh-Pemberton, the Governor of the Bank of England, held long talks with Helmut Schlesinger, the Bundesbank president, whose central bank was largely absent from the foreign exchanges when Britain was forced to devalue the pound last Wednesday. A Treasury spokesman described Mr Leigh-Pemberton's talks as cheerful and friendly. But another official said that feelings had run so high last week that he felt they were 'walking on eggshells'.Reuse content