EU leaders urge fiscal restraint

Alternative approach

While that is aimed at increasing the amount of money in the economy, not the amount of government spending, it underlines the contrast between the European stance and a US approach, which is piling on debt a lot faster.

Angela Merkel, the German chancellor, who has led calls for European fiscal restraint, said: “Trying to outdo one another with promises will certainly not bring any calm to the situation.”

Both Merkel and Nicolas Sarkozy, the French president, have argued that excessive public debt threatens global stability and countries must move swiftly to pay off debt when they can.

European governments already resisted a push for more spending from the US at a summit of Group of 20 finance ministers last week, and Thursday’s remarks underlined their position going into an April 2 summit of G-20 national leaders in London.

Fredrik Reinfeldt, the Swedish prime minister, who will take over the EU presidency in July, said: “You cannot solve everything by using taxpayers’ money. The huge deficit of the United States is a problem because it takes away resources for credit markets all over the world.”

European leaders say the EU’s €200bn programme over two years will be matched by automatic spending on rising unemployment benefits and social programmes to help those hit hardest by the downturn.

Recessionary pains

The heavy impact of recession is hitting a growing number of Europeans.

About three million people protested against the government’s handling of the economic crisis in France on Thursday, while German companies reeled off bad results and the UK appeared to be heading for its worst employment figures since WWII.

About 18 million people are believed to be unemployed in the EU today, about 7.6 per cent of the overall working population.