• Focus on developing world

• Counter to Beijing ‘jab diplomacy’

• Push against inequality

GEORGE PARKER — CORNWALL JAMES POLITI — WASHINGTON

Joe Biden has won support at the G7 summit for a “carry on spending” plan, as western leaders rejected austerity in a post-Covid world and vowed to tackle inequality at home and abroad.

Biden’s call for continued economic stimulus was backed by his counterparts at the summit in Cornwall, southwest England, in a gathering framed by leaders as the moment the west starts a fightback against an ascendant China.

The US president opened the first session of the gathering at Carbis Bay and — according to one witness — was backed by all G7 leaders as he called on the west to “meet the moment and support the economy”.

Mario Draghi, Italy’s prime minister and former head of the European Central Bank, followed Biden and declared: “There is a compelling case for expansionary fiscal policy.”

Draghi argued it was right to spend now, even if western countries had to commit to longer-term fiscal prudence to reassure markets and to ensure central bankers did not take fright and excessively hike interest rates.

In a declaration that summed up the west’s apparent conversion to social democracy, Conservative summit host Boris Johnson said it was vital that the pandemic did not cause a “lasting scar” of inequality.

Opening the meeting, he said: “It is vital that we don’t repeat the mistakes of the last great crisis, the last big economic recession of 2008 when the recovery was not uniform across all parts of society.”

The UK prime minister has described the austerity policies adopted by the government of predecessor David Cameron as “a mistake”. He added that the recovery should be built with the environment in mind and in “a more gender-neutral and more feminine way”.

G7 commitments are not binding but the appetite for fiscal expansion sets the scene for awkward discussions this autumn between Johnson and his fiscally conservative chancellor Rishi Sunak.

The G7 countries will use the summit to commit to higher spending to help the developing world, with a clear message that the west offers an alternative to the support offered by Beijing.

They agreed to supply 1bn vaccine doses to poorer countries, in response to China’s “vaccine diplomacy”. The US has claimed Beijing offers its medical help with “strings attached”.

The G7 will use weekend meetings to discuss helping poor countries tackle climate change and a capital investment programme styled by some UK officials as a counterweight to China’s Belt and Road global infrastructure programme.

Meanwhile, the summit will endorse plans for a system for taxing multinationals, although there is still a dispute over which companies it should cover.

Biden does not want an excessive burden on US tech companies, while Britain is fighting to exclude big banks. “The US does not see a conceptual basis for financial services exclusion,” a US Treasury official said.

After Donald Trump’s presidency, when the G7 was a dismal forum for division, the mood was upbeat. Emmanuel Macron, French president, threw his arm around Biden on the beach and talked of the need for democracies to work for “the middle classes”.