- U.S. President joins David Cameron to back Afghanistan strategy
- Prime Minister confident G20 leaders will back his budget cuts package
- Thousands of protesters battle police on the streets of Toronto
David Cameron and Barack Obama declared the war in Afghanistan must show signs of progress this year following the pair's first-ever meeting.
The two leaders said Britain and the U.S. had the right strategy in the troubled country ahead of the G20 summit in Toronto tomorrow.
Pleased to see you: Prime Minister David Cameron and President Barak Obama meet for the first time as leaders
'This period that we are in is going to be critical,' Mr Obama told reporters after the hour-long meeting.
Mr Cameron said: "Making progress this year, putting everything we have into getting it right this year is vitally important.'
Their comments came as the war reached a critical juncture, with June already proving the deadliest month of the nine-year war for coalition forces.
Earlier, Obama and Cameron were part of a statement from the summit of the leading eight industrial democracies that sketched out a strategy for enabling Afghanistan security forces to take over increased responsibility for the country within five years.
Beer you go: The leaders exchange bottles of ale as they face reporters
Mr Cameron also said separately, in a television interview, that there will likely be no British troops in Afghanistan five years from now.
At the end of the G8 summit held in Canada's forested Muskoka lakes region today, the men flew to Toronto in Mr Obama's Presidential helicopter.
And the pair exchanged jokes and beers from their respective countries as the occasion took on a friendly feel.
"He threatened to send me a bill," Mr Cameron joked. "But I said times are very tight in the U.K., so I'll have to take that as a free lift."
Earlier, the Prime Minister said he expected the G8 to back his approach, and played down suggestions of a rift with Mr Obama.
David Cameron and German Chancellor Angela Merkel, left, share a word during a G8 Working Session
Anger: Riot police march past a burning police car set fire by protesters in the financial district of Toronto
Despite Mr Obama's warning in an open letter last week that over-hasty withdrawal of state stimulus could result in 'renewed economic hardships and recession', Mr Cameron insisted the President accepted that economic policies must be tailored to suit individual countries' particular circumstances.
While countries with a budget surplus, like China, need to stimulate domestic demand, nations with large deficits need to restore confidence by 'living within their means', said the PM prior to the pair's meeting.
'The risk to us - and the Americans and others recognise this - is not taking action,' said Mr Cameron.
'I think that the G8 will actually conclude that those countries with the worst problems need to accelerate their action, which is what we have done.
'Of course, looking across the world, there is still the underlying problem of the big surplus countries, like China, and the big deficit countries, like parts of Western Europe and America, and we have got to deal with those imbalances, but part of dealing with the imbalances is for the worst deficit countries to roll up their sleeves, get on with the job and make sure they are living within their means.
Russian President Dmitry Medvedev, German Chancellor Angela Merkel and David Cameron attend in the working meeting
French President Sarkozy, President Obama, German Chancellor Angela Merkel and David Cameron share a laugh after their formal family photo session at the Muskoka Resort for the G8 Summit
Canadian Prime Minister Stephen Harper hosts the G8 working session with the African outreach leaders during G8 Summit
'That's what we have done in Britain. I think it will actually unlock confidence because people will see that there is a strong Government with a plan.'
The annual G8 gathering concluded today after reaching new agreements on help for child and maternal health in the developing world, but risks disappointing aid charities who wanted firm commitments to deliver on pledges from the 2005 Gleneagles summit to double financial assistance to the poor world.
Protesters and police clash during a march against the G-20 and the G-8 summits in Toronto, Ontario
The protest was one of several planned in the city to coincide with the gathering of world leaders for the G20 and G8 summits
Police officers hold back demonstrators protesting the G8/G20 summits
An accountability report released ahead of the summit found the group of rich nations was 18 billion US dollars short of the 50 billion dollar target for 2010.
The G8 leaders - Mr Cameron, Mr Obama, Canadian Prime Minister Stephen Harper, German Chancellor Angela Merkel, French President Nicolas Sarkozy, Italian PM Silvio Berlusconi, Russian President Dmitri Medvedev and Japanese PM Naoto Kan - travelled to Toronto for a meeting of the wider G20 group, taking in other major economies like China, India and Brazil.
The G20, which is emerging as the world's premier economic forum, will focus on measures to cement the global recovery from recession.
It is likely to see a clear divide between the US - backed by Canada - which wants more spending to spur growth and put a lid on unemployment, and Europe, where opinion has shifted sharply towards fiscal consolidation in the wake of the Greek debt crisis.
Britain is not expecting agreement on the reform of global financial institutions like the IMF and World Bank which was a key goal of G20 gatherings in London and Pittsburgh at the height of the recession, but is now seen as an issue for next year's French presidency of the group.
And US and Canadian opposition to a global banking levy means Britain and other states including France and Germany will be left to go it alone with their own taxes for the time being.
Police ride bikes through Allan Gardens in Toronto during a Free The Streets March and Block Party
Riots police get ready to deploy as activists and protesters march along the streets of downtown Toronto
Herman Van Rompuy, President of the European Council, David Cameron, PM Bruce Golding of Jamaica, President Goodluck Jonathan of Nigeria as Mr Obama passes by
Mr Cameron yesterday defended the £2.5 billion levy on banks' liabilities unveiled in Tuesday's Budget, but acknowledged 'this approach won't necessarily be for everyone'.
He added: 'We need to move faster on strengthening capital and liquidity in our banks so that they can fix their own problems without the taxpayer bearing the cost.'
Burdened by surging debt, G8 leaders said yesterday that they would spend $5 billion over five years for mothers and their newborns in Africa, shying away from bold aid pledges to the world's poor after failing to meet previous targets.
As rich economies slowly heal, helped by strong Asian growth and demand, disagreements over the next steps in the response to the crisis have unsettled investors who fear that a splintering of policy could undermine recovery.
'The cohesion generally evident among policymakers in dealing with the global crisis is in danger of giving way to a more divisive debate about how to manage the recovery,' Credit Agricole analysts said in a note to clients.
Canadian Finance Minister Jim Flaherty said he was cautiously optimistic the G20 nations could reach an agreement on targets for cutting their budget deficits, while South Korean Finance Minister Yoon Jeung-hyun highlighted concern the recovery is too fragile.
'No one knows for certain how the post-crisis world economy will look like. It is my opinion that we will enter a phase of jobless and low economic growth,' Yoon said.
About 2,000 anti-G20 demonstrators marched to within a couple of blocks of the U.S. Consulate in Toronto before they were halted by riot police. At least one person was arrested.
Should the G20 need a moment of levity, it has the soccer World Cup in South Africa.
Asked if he and Merkel would watch England play Germany on Sunday, Britain's Cameron said: 'There is an idea we might try and watch it together. I will try not to wrestle her to the ground during penalties, but we will have to see.'
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