G8 nations acknowledge signs of stability in world’s largest economies

At a meeting in Italy yesterday for the Group of Eight (G8) industrialised nations, it was acknowledged that there are signs of stabilisation in the world’s leading economies.

G8 ministers said stock markets were rising, interest rates more stable, and consumer confidence was returning.

However, finance ministers reluctantly admitted that the global situation still “remains uncertain” and the world’s largest economies still face major risks.

As a result, US Treasury Secretary Timothy Geithner, warned that major economies should not yet cut their economic stimulus packages - at least until a global recovery was under way.

Mr Geithner said: “The global economy is still operating well below potential and we still face acute challenges.”

The G8 nations comprise the United States, Germany, Japan, Britain, France, Italy, Canada and Russia.

In related news, Nobel Prize-winning economist Paul Krugman, said out of all the economies in Europe, Britain is in the best shape and is emerging from the global recession better than its rivals.

In an interview with The Observer newspaper, Mr Krugman said: “The UK has achieved a lot of monetary traction in the way that no one else has through the depreciation of the pound. In effect, you’ve carried out a successful beggar-my-neighbour devaluation.”

Mr Krugman’s comments come a few days after sterling surged to its highest level this year and one influential think tank said the recession in Britain had already ended.

The National Institute of Economic and Social Research (NIESR) said the UK’s economy grew in May by 0.1% and follows a similar rise in the previous month and was the first growth in a year.

If the NIESR forecasts prove to be correct, Britain could be the first major industrialised economy to emerge from recession.

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