World leaders of the most industrialized nations at the G8 Summit this weekend pledged to help global economic growth but no concrete solutions were provided to tackle the European debt crisis. After a brief reprieve shown in early Asian markets, nervousness returned throughout the day as investors continue to fret over Greece and Spain.
The G8 stressed the importance in promoting growth and jobs and also recognized problems among European banks and gave verbal backing for Greece to stay in the euro.
However, Germany did not give any signals that it would soften its stance on austerity and German Chancellor Angela Merkel is a strong proponent of austerity measures to cure Europe’s debt problems, even as Greece showed its opposition to such terms in the May 6 elections, which were inconclusive and fresh elections will be held on June 17. Concerns are growing that Greece may exit the euro. But if Greeks back pro-austerity parties on June 17, some of the concerns could ease.
Another sticky point is Germany’s resistance to the issuing of common bonds by euro-zone governments. However, newly elected French President François Hollande plans to push euro bonds as part of a growth package at an informal summit of European Union leaders on Wednesday in Brussels. Italian Prime Minister Mario Monti hopes to push for an evolution to euro bonds.