G-20 Nations Wonder: How Soon Is Too Soon to Cut Spending?

24 June 2010

Police officers stand watch in Toronto on Thursday ahead of the G-20 gathering

This is the VOA Special English Economics Report.

This weekend, leaders and top finance officials from the world’s twenty biggest economies gather in Toronto, Canada. One of the big issues to discuss is how and when to reduce deficits and economic growth measures as conditions improve.

Chancellor Angela Merkel is defending Germany's decision to cut spending by one hundred billion dollars over four years. But some experts say the world economy is still too weak for Europe’s biggest country to reduce spending.

Earlier this year, Germany was slow to react to the Greek debt crisis. European countries later had to agree to a nearly one trillion dollar rescue for the euro area.

Other countries including Britain, France and Japan have also announced cuts. But American Treasury Secretary Tim Geithner says: "Without growth now, deficits will rise further and undermine future growth."

Economists also point out that spending cuts alone do not solve the problems of countries with structural economic problems.

G-20 nations are also struggling with financial reform issues. These include new rules for risky financial products and closer supervision of banks.

This week, Britain's finance minister announced a new tax on big banks. Germany and France are considering similar measures to pay for future financial problems. President Obama proposed the idea for the United States in January. But how many countries will join Britain is not clear.