Eurozone worries dominate G7 finance summit

Europe’s debt crisis has been the subject of intense debate at a meeting of the G7 nations’ finance ministers in the Canadian Arctic.

World stock markets have slipped to a three month low over concerns that the eurozone may ultimately have to be bailed out.

Struggling eurozone nations like Greece, Spain and Portugal are under mounting pressure to ensure public spending is brought under control.

Economists are worried about the extent of the deficits some countries are having to deal with.

Canada’s Minister of Finance, Jim Flaherty said: “We have to be very mindful of the failure, the potential failure of domestic economies and of the persistence of some toxic assets and some banks. These are issues that are pressing.”

The US economy is still on thin ice though. The Obama administration expects a deficit equivalent to 10.6 per cent of gross domestic product in 2010,
more than three times the level considered sustainable by economists.

One thing the G7 members are all agreed on is that continued financial stimulus is vital in the absence of entrenched growth and a continuing failure to adequately replace public demand with private demand.