Upbeat G7 leaders predict "stabilisation"

G7 finance ministers meeting in Washington DC late last week have released an assessment of current economic conditions.

A statement from the ministers indicated that there were ’some signs of stablilisation’, following the precipitous downturn in global output caused by the credit crunch of recent months.

Improving lending flows from commercial banks to businesses and consumers and continuing ’stress tests’ of banks to ensure their stability were earmarked as priorities for member states at the meeting.

The summit follows revelations in the UK that the public finances face an unprecedented deterioration this year due to the downturn.

Chancellor of the Exchequer Alistair Darling revealed in the Budget that the government would be £175 billion in the red this year.

Analysts have suggested that these accelerating deficits could lead to a downgrade in the nation’s credit rating and lead to difficulties in covering gilt sales.

Other developed economies represented at the G7 meeting are facing similar problems caused by the credit crisis.

A $1 trillion package of measures agreed at the wider G20 summit of world leaders held in London earlier this month, including the trebling in size of the IMF, is aimed at tackling the downturn - and was also discussed at the weekend meeting.

US Treasury Secretary Timothy Geithner said that, despite the potential stabilisation, the economies of G7 states ’are not close to emerging from the darkness’.ADNFCR-2318-ID-19140634-ADNFCR