Because Greece holds the rotating EU presidency, it fell to Greek finance minister, Mr Nikos Christodoulakis, to publicly question the wisdom of President George W. Bush's $69 billion tax cut plan at the G7 meeting.

"It is only with great caution that fiscal policies should be used to create short-term economic stimulus," Mr Christodoulakis said.

"We have been witnessing a rapid deterioration of the US current account position, as well as of the US general government deficit, especially over the last two years. Large twin deficits may create sustainability risks, which in case they materialise would have significant ramifications well beyond the US itself. These concerns have not been dissipated by the recently proposed fiscal package."

Making his first appearance at a G7 summit, the US treasury secretary Mr John Snow agreed that his country's economy had the power to drag down or lift up others. "Within the international community, the United States must lead by example - and we are not growing fast enough or strongly enough," he said.

Responding to criticism of US deficit spending, Mr Snow argued that other wealthy countries shared responsibility for creating growth worldwide.

"Nothing will do more to help that than growth in the G7 economies, so they'll be in a stronger position to trade with the United States and buy goods and services from the United States," he said.

Mr Snow then set out his version of US economic policy. "I took some time to lay out our views and explain that we are committed to fiscal discipline," he asserted. "We are committed to balance over a period of a cycle. That goal is best achieved by a strong economy that produces revenue growth for the federal government and by restraining spending."

"I took the G7 colleagues through our plans for limiting discretionary spending growth to 4 per cent," Mr Snow continued. "I took them through the fact that our current deficits are quite modest and moderate in comparison with the size of the US economy - less than 3 per cent and declining, and they will become smaller both in absolute terms and in relative terms in the years ahead." The IMF predicts the US deficit will rise to 4.3 per cent of US GDP in 2003.

Asked whether the response to economic slowdown should be monetary or fiscal, Mr Snow said: "In the United States, it's clearly a fiscal response. It's the tax-relief plan and jobs-growth plan that the President has put forward."

For Mr Snow, the path to growth lay in "creating more market flexibility, dealing with labour market rigidities, capital flows and trade issues."