G7 'cautiously optimistic' on prospects for recovery

The world's richest countries are "cautiously optimistic'' abut the prospects for a global recovery, finance ministers and central bankers from the Group of Seven nations said yesterday at the end of one of their most peaceful meetings in recent times.

''Since we last met, prospects have generally strengthened for resumed expansion in our economies, although risks remain,'' they said in a statement.

G7 officials – from Canada, France, Germany, Italy, Japan, the UK and the US – met over two days in Ottawa, Canada, amid signs of recovery in America and Europe but with Japan still mired in recession.

The meeting passed off peacefully after the venue was switched to a hill-top retreat from the centre of Ottawa, which was disrupted by riots at the last gathering in November. A combination of knee-high snow, steep wooded slopes, temperatures as low as minus 20 degrees centigrade and the efforts of the Royal Canadian Mounted Police meant that the few dozen protestors who did turn up failed to disrupt the meetings.

Gordon Brown, the Chancellor of the Exchequer said: "People are cautiously optimistic about the major countries' economies over the next period of time – not complacent and certainly vigilant.

Mr Brown used the gathering to push his colleagues to pledge to raise the level of aid that they give to the world's poorest countries. He told his fellow ministers that the poorest nations, those in sub-Saharan Africa actually received the lowest levels of aid.

According to UK figures, total aid to the region has fallen in real terms from $20bn (£14.1bn) to $13bn in 10 years, equivalent to $9 for each poor person compared with $950 per person in the politically sensitive middle east. Mr Brown said the G7 had agreed to find "innovative ways'' to boost aid although he declined to elaborate when he spoke to reporters on the fringe of the meeting.

However, he did not seem to have overcome opposition to higher aid budgets from Paul O'Neill, the US Treasury Secretary, who said: "The basis of judging success should be improving health and living standards rather than how much money we put in.''

The G7 refrained from promising financial aid to Argentina, which is trying to cope with history's largest debt default. However, Mr Brown said a lot of work was being done on proposals by the International Monetary Fund for a new bankruptcy code to help countries that suffer a similar crisis in the future.

"People know that ad hoc work to deal with financing problems is not as good as having an agreement about possible ways of approaching these issues,'' he said.