G7 leaders agreed to keep stimulus flowing for their economies

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CARBIS BAY, England (Reuters) – Leaders of the Group of Seven rich nations were in broad agreement about the need to continue supporting their economies with fiscal stimulus, a source familiar with the discussions said on Friday, the opening day of a G7 summit.

The backing for more stimulus was shared by all leaders including Angela Merkel of Germany which has traditionally opposed heavy borrowing to spur growth, a position which it has relaxed in the face of the COVID-19 crisis.

The administration of U.S. President Joe Biden has been pushing its allies to keep on spending with Treasury Secretary Janet Yellen urging her G7 colleagues in February to “go big”.

The source said the G7 leaders believed there should be long-term policies for ensuring the health of the public finances in the future, echoing the position of their finance ministers who met earlier this month in London.

The leaders believed a post-lockdown rise in inflation in many countries would prove temporary, the source said.

Italian Prime Minister Mario Draghi stressed the importance of taking action to reduce unemployment such as retraining and offering support for younger workers, a proposal supported by Canada’s Justin Trudeau, the source said.

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