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EU coming round to pro-stimulus measures instead of cuts

May 10, 2013 at 5:44 PM   |   Comments

AYLESBURY, England, May 10 (UPI) -- EU senior ministers attending a G7 summit northwest of London are having to wriggle back into a pro-growth posture after months spent on fractious -- and expensive -- campaign for cutbacks, economic retrenchment and overall austerity.

Months after French President Francois Hollande broke ranks from Berlin's pro-austerity mantra, the European Union is having to listen to its own rebels as well critics elsewhere -- including the United States -- who want more European stimulus-driven policies and less tightening of belts.

EU economies that slashed away at Berlin's bidding now face deep recessionary trends and are under pressure from furious electorates as the numbers of the jobless multiply.

The meeting began Friday and will continue over the weekend. The Group of Seven includes Britain, Canada, France, Germany, Italy, Japan and the United States.

Leaders of the seven plus Russia will meet in a wider meeting June 17-18 June at Lough Erne Golf Resort, Enniskillen, Northern Ireland.

Friday's talks were to focus mostly on European Union's woes but a row was brewing as ministers took issue with Japan's stimulus measures, seen as a backdoor strategy to drive down the yen's value and promote Japanese exports.

Analysts said Japan was under pressure to avoid measures that could trigger a currency war. EU ministers are particularly sensitive, as their countries want to boost exports, too.

Cash-strapped Europe is also pushing for closer collaboration on tax collection, and new data collated with help from intelligence agencies suggests the continent's rich and famous are in for a few shocks.

Hundreds of Europe's rich were named in lists alleging elaborate tax evasion schemes involving EU accountants and lawyers and the EU states' own overseas tax havens. Britain, president of the Group of Eight this year, is top of the list with overseas territories named as tax havens.

The tax recovery proceeds are seen by governments as timely cash boost in lean times.

British Chancellor of the Exchequer George Osborne said the European Union faced the challenge of embracing urgent measures to nurture recovery.

"Our challenge is not to falter in the difficult steps we need to take to make that recovery sustainable and lasting," Osborne said.

"Markets have calmed, and there are signs that this is feeding through into greater confidence. But we cannot take the global recovery for granted," he added.

Analysts said European Union's toughest challenge was how to row back on months of policymaking and pronouncements that advocated the opposite of what the union is having to accept. Severe budget cuts are now seen to be a discredited option, but EU leaders are loath to admit their failed attempts at reform.

U.S. Treasury Secretary Jacob Lew called for "the right balance between austerity and growth."

Recent economic data from Germany and the United States are helping ministers argue for more stimulus measures.

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