Bland final declaration ignores global problems

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The governments responsible for half of the economy of the planet will issue a statement today telling people to forget fears of a global recession or deflation.

The governments responsible for half of the economy of the planet will issue a statement today telling people to forget fears of a global recession or deflation.

However, the final declaration of the G8 summit will avoid all but vague references to the problems that are weighing most heavily on the global economy: the downward spiral of the dollar and transatlantic rows over trade.

The leaders of the world's richest countries agreed to put up a bland, optimistic front rather than risk making things worse by having a public row over the issues that divide them. The statement will point to falling oil prices and the fact that leading democracies are talking to each other again after the rows over Iraq as reasons for optimism.

Tony Blair said the general mood among the G8 leaders during their economic discussion yesterday was confidence that their individual economies - and the world economy - were about to turn the corner.

The Prime Minister said there was also agreement between the leaders that European countries must push ahead with "structural" changes in contentious areas such as pensions and labour markets. "Provided we do face up to and overcome these challenges of structural reform, we've got every prospect of resuming strong growth in the near future," he said.

The G8 leaders issued a declaration today reaffirming the importance of a new round of negotiations on trade, which re-opens with a ministerial conference in Cancun, Mexico, in September.

The bland summit statement called for the removal of barriers to trade in food and services but offered no hint that the Americans and Europeans, in particular, had narrowed, or even discussed, their differences in Evian.

On the value of the dollar - which has fallen by 15 per cent against the euro this year - Catherine Colonna, a spokeswoman for the French President, Jacques Chirac, said that the leaders had agreed a "common approach" but would give no details.

US officials repeated their standard line that Washington believes that the dollar is undervalued but its level must be left to the markets to decide. Japan and some European countries fear that, ahead of next year's presidential election, the US may be seeking to boost its own economy with a low dollar, at the expense of growth elsewhere.

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