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When to stop spending - the question for the G8

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When to stop spending - the question for the G8


Finance ministers from the world’s top eight industrialised powers meeting today in the Italian city of Lecce are expected to focus on working together to tackle the current recession.

But the key question looks like being whether governments should continue to stimulate their economies or begin to pull back. With the global economy beginning to show signs of a slight recovery after billions of euros of support were pumped into banks and businesses, some leaders are looking for what they call “exist strategies” from their stimulus packages. But with Eurozone industrial production shrinking by more than a fifth in April, and new data anticipating an even weaker next quarter, others believe it is too early to think about cutting public expenditure. Nevertheless the talks are likely to produce a request to the International Monetary Fund to provide governments with some political cover when they eventually start making painful cuts to bring budget deficits under control.

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