European Institute

As leaders head to Toronto for a G-20 summit meeting this weekend, the stage is set for the EU and the U.S. to air their clashing views about the right priority for national fiscal policies at this stage of the crisis.

The meeting will thus be a sounding board – and little else. Major collective decisions are scheduled for the G-20’s subsequent meeting this fall in South Korea.

But a trans-atlantic clash of views has become increasingly strident about what fiscal strategy to adopt now amid signs of global economic recovery. The Obama administration is publicly urging Europe to copy the U.S. example of continuing to pump money into the system in order to spur economic growth. But key EU leaders – notably Germany – are publicly insisting that it is time to rein in deficit spending to tackle the accumulating (and already monumental) debt.