CAPITALISTS BEWARE!

Emergency G7 summit called as markets continue to fall

The world’s most powerful countries will hold an emergency summit to discuss how to stop another global recession it was announced yesterday, as President Barack Obama appealed for calm.


Finance ministers from the G7 group, which includes America, Britain, Germany and France, are to meet amid growing fears that eurozone countries are failing to stop the “contagion” of the debt crisis.

Details of the move emerged as stock markets across Europe continued to plunge. The FTSE 100 yesterday suffered a 2.7 per cent fall, bringing the total wiped off the value of shares in the past week to £149 billion.

David Cameron yesterday interrupted his holiday in Tuscany to hold discussions with Angela Merkel, the German Chancellor.

The European Central Bank was last night poised to start buying up billions in Italian debt after Silvio Berlusconi, the Italian prime minister, promised to enshrine spending limits in the constitution and balance his budget by 2013. Mr Berlusconi also announced that the leaders of the G7 group would hold an emergency summit “within weeks”.

Italy has £1.4 trillion of sovereign bonds outstanding and the prospect of the ECB taking on the debt has triggered deep divisions between eurozone governments.

Markets crashed yesterday and for the first time borrowing costs for Italy, the eurozone’s third largest economy, went above Spain’s.

Mr Cameron and George Osborne, the Chancellor, both insisted that there was no need for either to cut their holidays short and return to Britain.

In America, better than expected employment figures eased market fears as the Dow Jones rose after a volatile day of trading.

Mr Obama attempted to calm the situation saying: “We are going to get through this. Things will get better.”

European leaders faced criticism for indecision as the escalating debt crisis threatened to become a full blown economic crash.

Louise Cooper, an analyst at BGC Partners, said stock traders were “starting to feel the fear” as governments appeared powerless to halt a slide into a global crisis.

“The horrible reality is that those leaders in charge of our economy have no answers,” she said.