Analytical Studies
G7/8 Summits • G7 London Summit
The London Economic Declaration
London, June 9, 1984
- We, the Heads of State or Government of seven major
industrialized countries and the President of the Commission of
the European Communities, have gathered in London from 7 to 9
June 1984 at the invitation of the Rt. Hon. Margaret Thatcher,
FRS MP, the Prime Minister or the United Kingdom, for the tenth
annual Economic Summit.
- The primary purpose or these meetings is to enable Heads
of State or Government to come together to discuss economic problems,
prospects and opportunities for our countries and for the world.
We have been able to achieve not only closer understanding of
each other's positions and views but also a large measure of agreement
on the basic objectives of our respective policies.
- At our last meeting, in Williamsburg in 1983, we were
already able to detect clear signs of recovery from world recession.
That recovery can now be seen to be established in our countries.
It is more soundly based than previous recoveries in that it
results from the firm efforts made in the Summit countries and
elsewhere over recent years to reduce inflation.
- But its continuation requires unremitting efforts. We
have to make the most of the opportunities with which we are now
presented to reinforce the basis for enduring growth and the creation
of new jobs. We need to spread the benefits of recovery widely,
both within the industrialized countries and also to the developing
countries, especially the poorer countries who stand to gain more
than any from a sustainable growth of the world economy. High
interest rates, and failure to reduce inflation further and dampen
down inflationary expectations, could put recovery at risk. Prudent
monetary and budgetary policies of the kind that have brought
us so far will have to be sustained and where necessary strengthened.
We reaffirm the commitment or our Governments to those objectives
and policies.
- Not the least of our concerns is the growing strain of
public expenditure in all our countries. Public expenditure has
to be kept within the limits of what our national economies can
afford. We welcome the increasing attention being given to these
problems by national governments and in such international bodies
as the Organisation for Economic Co-operation and Development
(OECD).
- As unemployment in our countries remains high, we emphasize
the need for sustained growth and creation of new jobs. We must
make sure that the industrial economies adapt and develop in response
to demand and to technological change. We must encourage active
job training policies and removal of rigidities in the labor market,
and bring about the conditions in which more new jobs will be
created on a lasting basis, especially for the young. We need
to foster and expand the international trading system and liberalize
capital markets.
- We are mindful of the concerns expressed by the developing
countries, and of the political and economic difficulties which
many of them face. In our discussion of each of the issues before
us we have recognized the economic interdependence of the industrialized
and developing countries. We reaffirm our willingness to conduct
our relations with them in a spirit of goodwill and cooperation.
To this end we have asked Ministers of Finance to consider the
scope for intensified discussion of international financial issues
of particular concern to developing countries in the IBRD [International
Bank for Reconstruction and Development] Development Committee,
an appropriate and broadly representative forum for this purpose.
- In our strategy for dealing with the debt burdens of
many developing countries, a key role has been played by the International
Monetary Fund (IMF), whose resources have been strengthened for
the purpose. Debtor countries have been increasingly ready to
accept the need to adjust their economic policies, despite the
painful and courageous efforts it requires. In a climate of world
recovery and growing world trade, this strategy should continue
to enable the international financial system to manage the problems
that may still arise. But continuously high or even further growing
levels of international interest rates could both exacerbate the
problems of the debtor countries and make it more difficult to
sustain the strategy. This underlines the importance of policies
which will be conducive to lower interest rates and which take
account of the impact of our policies upon other countries.
- We have therefore agreed:
- To continue with and where necessary strengthen policies
to reduce inflation and interest rates, to control monetary growth
and where necessary reduce budgetary deficits;
- To seek to reduce obstacles to the creation of new jobs:
- by encouraging the development of industries and services
in response to demand and technological change, including
in innovative small and mediumsized businesses;
- by encouraging the efficient working of the labor market;
- by encouraging the improvement and extension of job training;
- by encouraging flexibility in the patterns of working
time;
- and by discouraging measures to preserve obsolescent production
and technology.
- To support and strengthen work in the appropriate international
organizations, notably the OECD, on increasing understanding of
the sources and patterns of economic change, and on improving
economic efficiency and promoting growth, in particular by encouraging
innovation and working for a more widespread acceptance of technological
change, harmonizing standards and facilitating the mobility of
labor and capital;
- To maintain and wherever possible increase flows of
resources including official development assistance and assistance
through the international financial and development institutions,
to the developing countries and particularly to the poorest countries;
to work with the developing countries to encourage more openness
towards private investment flows; and to encourage practical measures
in those countries to conserve resources and enhance indigenous
food and energy production. Some of us also wish to activate
the Common Fund for Commodities;
- In a spirit of cooperation with the countries concerned,
to confirm the strategy on debt and continue to implement and
develop it flexibly case by case; we have reviewed progress and
attach particular importance to:
- helping debtor countries to make necessary economic and
financial policy changes, taking due account of political and
social difficulties;
- encouraging the IMF in its central role in this process,
which it has been carrying out skillfully;
- encouraging closer cooperation between the IMF and the
International Bank for Reconstruction and Development
(IBRD), and strengthening the role of the IBRD in fostering
development over the medium and long term;
- in cases where debtor countries are themselves making
successful efforts to improve their position, encouraging more
extended multiyear rescheduling of commercial debts and standing
ready where appropriate to negotiate similarly in respect of debts
to governments and government agencies;
- encouraging the flow of longterm direct investment; just
as there is need for industrial countries to make their markets
more open for the exports of developing countries, so these
countries can help themselves by encouraging investment from
the industrial countries;
- encouraging the substitution of more stable longterm finance,
both direct and portfolio, for short-term bank lending.
- To invite Finance Ministers to carry forward, in an urgent
and thorough manner, their current work on ways to improve the
operation of the international monetary system, including exchange
rates, surveillance, the creation, control and distribution of
international liquidity and the role of the IMF; and to complete
the present phase of their work in the first half of 1985 with
a view to discussion at an early meeting of the IMF Interim Committee.
The question of a further allocation of Special Drawing Rights
is to be reconsidered by the IMF Interim Committee in September
1984;
- To carry forward the procedures agreed at Versailles
and at Williamsburg for multilateral monitoring and surveillance
of convergence of economic performance toward lower inflation
and higher growth;
- To seek to improve the operation and stability of the
international financial system, by means of prudent policies
among the major countries, by providing an adequate flow of funding
to the international financial institutions, and by improving
international access to capital markets in industrialized countries;
- o urge all trading countries, industrialized and developing
alike, to resist continuing protectionist pressures, to reduce
barriers to trade and to make renewed efforts to liberalize and
expand international trade in manufactures, commodities and services;
- To accelerate the completion of current trade liberalization
programs, particularly the 1982 GATT work program, in cooperation
with other trading partners; to press forward with the work on
trade in services in the international organizations; to reaffirm
the agreement reached at the OECD Ministerial Meeting in May 1984
on the important contribution which a new round of multilateral
trade negotiations would make to strengthening the open multilateral
trading system for the mutual benefit of all economies, industrial
and developing; and, building on the 1982 GATT work program, to
consult partners in the GATT with a view to decisions at an early
date on the possible objectives, arrangements and timing for a
new negotiating round.
- We are greatly concerned about the acute problems of
poverty and drought in parts of Africa. We attach major importance
to the special action program for Africa which is being prepared
by the World Bank and should provide renewed impetus to the joint
efforts of the international community to help.
- We have considered the possible implications of a further
deterioration of the situation in the Gulf for the supply of oil.
We are satisfied that, given the stocks of oil presently available
in the world, the availability of other sources of energy, and
the scope for conservation in the use of energy, adequate supplies
could be maintained for a substantial period of time by international
cooperation and mutually supportive action. We will continue
to act together to that end.
- We note with approval the continuing consensus on the
security and other implications of economic relations with Eastern
countries, and on the need to continue work on this subject in
the appropriate organizations.
- We welcome the further report of the Working Group on
Technology, Growth and Employment created by the Versailles Economic
Summit, and the progress made in the eighteen areas of cooperation,
and invite the Group to pursue further work and to report to Personal
Representatives in time for the next Economic Summit. We also
welcome the invitation of the Italian Government to an international
conference to be held in Italy in 1985 on the theme of technological
innovation and the creation of new jobs.
- We recognize the international dimension of environmental
problems and the role of environmental factors in economic development.
We have invited Ministers responsible for environmental policies
to identify areas for continuing cooperation in this field. In
addition we have decided to invite the Working Group on Technology,
Growth and Employment to consider what has been done so far and
to identify specific areas for research on the causes, effects
and means of limiting environmental pollution of air, water and
ground where existing knowledge is inadequate, and to identify
possible projects for industrial cooperation to develop costeffective
techniques to reduce environmental damage. The Group is invited
to report on these matters by 31 December 1984. In the meantime
we welcome the invitation from the Government of the Federal Republic
of Germany to certain Summit countries to an international conference
on the environment in Munich on 2427 June 1984.
- We thank the Prime Minister of Japan for his report
on the Hakone Conference of Life Sciences and Mankind, organized
by the Japan Foundation in March 1984, and welcome the intention
of the French Government to sponsor a second conference in 1985.
- We believe that manned space stations are the kind of
program that provides a stimulus for technological development
leading to strengthened economies and improved quality of life.
Such stations are being studied in some of our countries with
a view to their being launched in the framework of national or
international programs. In that context each of our countries
will consider carefully the generous and thoughtful invitation
received from the President of the United States to other Summit
countries to participate in the development of such a station
by the United States. We welcome the intention of the United
States to report at the next Summit on international participation
in their program.
- We have agreed to meet again next year and have accepted
the Federal Chancellor's invitation to meet in the Federal Republic
of Germany.
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