G7 Summit: The summiteers come down to earth: Cautious hope replaces euphoria - Warnings of cuts in welfare spending - US President at odds with Tokyo

LEADERS of the Group of Seven leading industrial states yesterday replaced euphoria with cautious hope on the outlook for world trade and warned that welfare budgets in almost all their countries will have to be curbed.

The three-day world economic summit concluded with hints that French opposition to deep cuts in farm-export subsidies could be bought off by the European Community's structural fund.

The German suggestion came as President Francois Mitterrand of France persisted in warning that his country would not engage in 'unilateral sacrifice' for the sake of a successful outcome on world trade.

President Boris Yeltsin said Russia's meeting with the Seven had been useful. It had yielded a dollars 3bn ( pounds 2bn) fund to assist privatisation, while the IMF had recently approved a dollars 1.5bn loan and the World Bank a dollars 610m credit to assist the oil industry.

Both John Major and Helmut Kohl, the German Chancellor, warned that spiralling social costs like pensions and benefits, due to ageing population, growing demands on public health care and high unemployment, would force most of the Seven to cut welfare budgets.

In a final declaration the G7 refrained from hailing the provisional tariff-cutting deal on industrial goods as a breakthrough - as their officials did earlier this week. Instead, it was 'significant progress made towards a large market-access package'. While the leaders said that the deal was a 'major step' towards immediate resumption of the Uruguay Round, they recognised that substantial hurdles lay in the way of a final accord: 'Nothing is agreed until everything is agreed.'

On French insistence, the communique omitted a statement in the draft declaration describing the agreement as bringing within reach the most

far-reaching market-access deal in history.

Flagging a key obstacle in the revived General Agreement on Tariffs and Trade (Gatt) talks, Mr Mitter rand said that in last year's US-EC Blair House accords on curbing farm- export subsidies, the European Commission had exceeded its negotiating mandate. 'Decisions of the EC rest on the politicians, not on the technicians,' he said. But Mr Mitterrand acknowledged that his country was trying to work with Britain and Germany to prevent the trade talks from collapsing.

Preparing for a hard sell at home, President Bill Clinton struck a more sanguine note: 'We were able to get this huge breakthrough on the trade manufactured goods with these other nations, which could lead to a huge number of new jobs for America.'

Mr Kohl underscored the importance of a Gatt deal to the Third World. 'It is essential for developing countries who especially need open markets and export opportunities which is much better than ultimately giving them financial hand-outs,' he said. He spoke as Mr Mitterrand announced a Franco-Japanese initiative to study the support of Third World commodity prices, complaining that the rest of the Group 'were unwilling to associate themselves with it'.

To brighten the prospects for jobs and growth, the summiteers stressed the need for a series of structural reforms, emphasising especially the need for lower social costs. Mr Major said most countries had very substantial budget deficits which needed to be cut. He added: 'All of us need to keep social costs within the bounds that we can afford.'

This theme was echoed by Mr Kohl while the G7 called for more flexible labour markets and announced a 'job summit' of high-level officials this autumn to explore the causes of structural unemployment, and ways to cut social costs. Some finance ministers privately welcomed the suggestion as a way of deflecting domestic public opprobrium on to the G7 as a whole.

'It's a good thing if it is not us finance ministers who are seen as the bad guys. It is better if we are seen to attack social costs as a group,' said Theo Waigel, the German Finance Minister.

The G7 also underscored other key measures intended to lift their economies out of low growth, including:

Cutting deficits to ensure a rapid reduction in interest rates in Europe, and lower long-term rates in the US.

An undertaking by Japan to strengthen domestic demand, sucking in foreign imports and boosting growth elsewhere.

In a gesture to the Third World, the G7 agreed to support renewal of a soft- loan IMF facility, debate deeper debt relief for the world's poorest nations and back next year's Cairo conference on population and development.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksNow available in paperback
Arts and Entertainment
Madonna is not in Twitter's good books after describing her album leak as 'artistic rape and terrorism'
music
News
i100
Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France
tv
Arts and Entertainment
The Apprentice candidates Roisin Hogan, Solomon Akhtar, Mark Wright, Bianca Miller, Daniel Lassman
tvReview: But which contestants got the boot?
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Provisioning Specialist

Negotiable: Recruitment Genius: A Provisioning Specialist is required to join ...

Recruitment Genius: Sales Apprenticeships

£10000 per annum: Recruitment Genius: This is an outstanding opportunity for 1...

Recruitment Genius: Customer Support Engineer

Negotiable: Recruitment Genius: A Support Engineer is required to join a well-...

Recruitment Genius: Customer Services Administrator - Swedish Speaking

Negotiable: Recruitment Genius: This is an exciting opportunity to join an awa...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum