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Europe

Germany Resists US Call for Spending Hike to Revive Economy

German Finance Minister Peer Steinbrueck on Monday opposed a US appeal to governments to inject more taxpayer money into their sliding economies.

German Finance Minister Peer Steinbrueck

Steinbrueck is opposed to ploughing more public money into the German economy

"We're not planning on any additional measures," Steinbrueck told journalists as he arrived for a meeting with his eurozone counterparts in Brussels on Monday, March 9. "We should concentrate on measures that have already been decided."

German lawmakers this year passed an stimulus package worth 50 billion euros ($63 billion) to haul Europe's largest economy out of its worst recession in decades. It includes investments in infrastructure, tax relief, reductions in health care contributions and money for families with children. It also provides 2,500-euro bonuses to people who junk old cars to buy new vehicles.

The package follows an earlier 23 billion-euro plan, criticized in Germany and abroad as too cautious.

Lawrence Summers, a top economics advisor to US President Barack Obama, this week urged governments worldwide to pump more public money into their economies to revive falling global demand.

"No rift" with Europe on tackling crisis

The White House has been trying in recent days to steer clear of an out-and-out confrontation with Europe over how to best handle a deep global recession. While the United States would like to see more stimulus plans, Europe has insisted on more financial regulations.

But White House spokesman Robert Gibbs said on Monday President Obama believes that regulation is needed to prevent a repeat of the present crisis in the future, and stimulus is required to get the economy moving now. "So I don't think there's any rift (with Europe) at all," Gibbs told reporters.

World leaders are counting on a Group of 20 (G20) summit in London next month to come up with global solutions for dealing with the financial crisis.

The US will use the London meeting to discuss "a number of subjects, both financial regulation and economic stimulus, largely because there isn't one single solution to those problems," Gibbs said.

Graphic of the US capitol with a flag

The US would like to see more stimulus measures in Europe

The United States has a stimulus plan of nearly $790 billion (626 billion euros) which it hopes will drag it out of what has shaped up to be the deepest recession in decades.

In the European Union, countries have agreed to stimulus measures worth about 400 billion euros, the equivalent of 3.3 percent of the bloc's gross domestic process, according to AFP news agency.

Europe won't see much improvement in 2009

Economic recovery for the 16 countries which share the euro will not happen this year, EU Economic Affairs Commissioner Joaquin Almunia said Monday. Previous forecasts had predicted that the economies would pick up in late 2009.

"The recovery will take longer than we were expecting only a few months ago," Almunia told journalists after a meeting with euro zone finance ministers in Brussels.

The European Commission forecast in January that the euro zone would contract 1.9 percent for the whole of 2009 before growing a measly 0.5 percent in 2010.

"We'll present a new forecast in May but taking into account the downside risks that have appeared and started to materialize after we presented the January forecasts, I tend to think that this scenario or gradual recovery will be (postponed) to 2010," Almunia said.

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