G20 agrees to cut deficits in half by 2013: Merkel

27th June 2010, Comments 0 comments

The richest members of the G20 group of world economic powers will agree on Sunday to strive to cut their deficits in half between now and 2013, German Chancellor Angela Merkel told reporters.

"This will be part of the final document. This is more than I expected. This is a success," Merkel said, as G20 leaders arrived at the summit venue in downtown Toronto for their second and final day of talks.

"We as Europeans can say that our path has found support," she boasted.

Merkel came to Canada determined to defend the decision by several European governments to slash their public deficits, despite fears in Washington and other G20 capitals that this will stifle growth.

"Developed industrial countries must halve their deficits by 2013 and must start from 2016 to reduce their debts. That means to have balanced budgets in order to be able to address the debts," she said.

"This is an important common goal that will lead to sustainable growth," she added, endorsing the summit's buzz phrase "growth-friendly deficit reduction", which she said had been negotiated with the US delegation.

In the wake of the 2008 global economic crash, Europe was rocked by a sovereign debt crisis that pushed some eurozone members, notably Greece, close to default and undermined financial stability in the single currency bloc.

The response of G20 members Germany, Britain and to a lesser extent France has been to order massive cuts in government spending and to impose tax increases in order to bring the deficits under control.

US officials have criticized the tactic, fearing rapid cuts could slow the still fragile global recovery, but reports Sunday indicated that President Barack Obama may agree to set a medium-term debt reduction goal.

The G20 group includes the major developed economies of the G8 as well as the largest emerging economies.

© 2010 AFP

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