WORLD ECONOMY NEEDS BOLD ACTION

Robert Peston , Business Editor BBC News.

 

International Monetary Fund chief Christine Lagarde has urged "bold action" on the faltering world economy, ahead of a meeting of the G7 group of leading economies. The G7 is meeting in Marseille to consider a "coordinated response". The two-day meeting comes as the Organisation for Economic Co-operation and Development predicted a global slowdown this year.Europe is also struggling with a sovereign debt crisis.

Credible plans: Speaking at the same event in London before leaving for the G7 talks, Chancellor George Osborne vowed to stick to the UK's deficit reduction plan - which has so far helped the UK avoid the kind of bond market turmoil seen in the eurozone."It is the rock of stability on which our economy is built," he said.

The IMF chief praised the UK's plans - with several caveats.

Rocky road ahead

No communique will be issued after the talks in Marseille, according to French Finance Minister Francois Baroin.Earlier, Japanese Finance Minister Jun Azumi said he would explain his nation's intervention to stem the increase in its currency, which has hurt its exporters."Japan's economy has been steadily recovering, but I'm concerned that it is showing some signs of downturn due to the yen's rise," Mr Azumi said.

"I want to share the view that it would be bad for the world economy if Japan's economy faces downturn."

The OECD predicts the G7 economies will grow by just 0.2% in the last three months of the year.

The group also expects 0.3% growth in the UK in the fourth quarter, but said the economy could contract by as much as 1%.