CARBIS BAY, England: The Group of Seven (G7) leaders, including Angela Merkel of Germany who has traditionally opposed heavy borrowing to spur growth, unanimously agreed to continue supporting their economies with fiscal stimulus, amid the complicated developments of the Covid-19 pandemic.
The administration of U.S. President Joe Biden has been pushing its allies to continue spending, with Treasury Secretary Janet Yellen urging her G7 colleagues in February to "go big".
The International Monetary Fund has also repeatedly urged G7 countries and others to continue fiscal support measures.
"There was broad consensus across the table on continued support for fiscal expansion at this stage," a source said, adding that Biden, British Prime Minister Boris Johnson and Italy's Mario Draghi expressed particular support.
The source said the G7 leaders believed there should be long-term policies to ensure the health of public finances in the future, echoing the position of their finance ministers who met earlier this month in London.
Draghi, president of the European Central Bank from 2011 to 2019, said the rich Western economies needed some sort of "long-term fiscal anchor" to reassure investors and avoid a rise in market interest rates that could hurt the recovery, the source said.
The leaders believed a post-lockdown rise in inflation in many countries would prove temporary, the source said.
"There was a bit of discussion on inflation, but the feeling was that it was temporary," the source said.
G7 leaders highlighted the importance of reducing unemployment by retraining workers and offering support for younger workers, a proposal supported by Canada's Justin Trudeau, the source said.
At the opening of the meeting, Johnson said the leaders needed to be careful not to "repeat the mistakes of the last great crisis, the last big economic recession of 2008, when the recovery was not uniform across all parts of society."