G20 Rifts Growing

The G8 / G20 meetings being held in Toronto this weekend were billed as an opportunity for governments to come to agreement on a unified approach to avoid slipping back into recession. The question of a global bank tax favored by some countries was the initial stumbling block, but now, other potential issues around stimulus spending are coming to the fore.

Several countries, led notably by the US, are calling for an extension of government spending to maintain momentum, while others are cutting back on spending. Germany has taken the most aggresive stance on this side of the issue, with its latest budget containing record spending cuts and a call to reduce deficit spending.

“Governments should not become addicted to borrowing as a quick fix to stimulate demand,” wrote Germany’s Finance Minister Wolfgang Schaeuble in an article published today in the Financial Times. “Deficit spending cannot become a permanent state of affairs,” he added.

Source: AFP News

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