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Osborne pushing for united response

George Osborne insists "good progress" is being made towards securing a shared international agenda for tackling the global debt crisis as he prepares for a second day of talks with international finance ministers.

The Chancellor will hold discussions with the G7 industrialised economies in Marseille but divisions over how to stimulate growth means securing decisive action will be difficult.

Following a first round of meetings, Mr Osborne said there is a "strong feeling" of support "for credible fiscal consolidation plans for countries with high budget deficits like the one we have in Britain".

He added: "What's important now is a concerted international agenda to deal with the global debt crisis and support growth along the lines I set out in London with Christine Lagarde, the managing director of the IMF.

"I think we are making good progress towards that goal."

Mr Osborne and Prime Minister David Cameron were forced to defend their economic policy on Friday after Ms Lagarde said the UK's stance remains "appropriate" but "the heightened risk" means a need for a "heightened readiness to respond".

Mr Cameron said: "We have one of the biggest budget deficits anywhere in the world and that's why the OECD and Christine Lagarde from the IMF and others have said that Britain is quite a special case with its vast deficit and we have got to deal with that.

"The reason we have interest rates that are as low as Germany's but our national deficit is bigger than Greece's is because we have got a plan to deal with our debts and we mustn't give up on that plan."

Ms Lagarde met Mr Osborne at the Chatham House think tank in London ahead of the G7 and warned the risks from stagnating growth are increasing and have to be weighed against risks of sovereign debt.

She said: "The policy stance remains appropriate. But the heightened risk means a heightened readiness to respond, particularly if it looks like the economy is headed for weak growth and high unemployment."


From Belfast Telegraph