Europe dismissed US calls on Monday for further government spending to counter recession, exposing a rift on a key issue before a G20 summit of the world's largest industrial and developing economies.
The US appeal came from Larry Summers, head of the White House's National Economic Council, and the European reply came from Jean-Claude Juncker, chairman of a meeting of finance ministers from countries in the euro currency zone.
"The 16 finance ministers agreed that recent American appeals insisting Europeans make an added budgetary effort were not to our liking, given that we are not prepared to go further in the recovery packages we have put forward," Juncker told a news conference in Brussels after ministers held regular talks.
He chairs the Eurogroup, a forum where euro zone finance ministers meet monthly to discuss economic policy, and as such he plays the role of chief spokesman after such meetings.
Summers, in an interview in the Financial Times, said there was an urgent need for more public spending and that kickstarting growth should take precedence over ironing out other problems.
"The right macroeconomic focus for the G20 is on global demand and the world needs more global demand," said Summers, who made it clear he believed this was no time for arguments about the need for the United States to save more and China a bit less, the essence of the global imbalance debate.
"The old global imbalances agenda was (about) more demand in China, less demand in America. Nobody thinks that is the right agenda now," Summers said.
"There's no place that should be reducing its contribution to global demand right now. It is really the universal demand agenda."
The comments precede a meeting this week and a summit on April 2 where leaders of the G20 are under pressure to produce a convincing response to the worst downturn in decades.
Finance ministers from the euro zone were preparing their position for those G20 meetings at Monday's talks in Brussels, and were due to widen their advance deliberations on Tuesday to colleagues from the entire 27-country European Union.
A document they are expected to approve makes clear that Europe feels it has announced sufficient fiscal stimulus for now and wants the focus on rolling out all those measures rapidly and in a coordinated manner.
"Continuing international coordination of fiscal stimulus measures is key," says the document, seen by Reuters.
Total support provided by fiscal policies in 2009 and 2010 was estimated at between 3 and 4 per cent of EU GDP, and of that about one third was discretionary stimulus measures, it said.
German Finance Minister Peer Steinbrueck also made it clear as he arrived at the Brussels talks that Europe had no plans to go further for now.
"We are not debating any additional measures," he said. US President Barack Obama's $787-billion stimulus plan, for 2009-10 but a bit longer in the case of tax cuts, amounts to about 5.5 per cent of GDP.