G8 Leaders Highlight Growth, Not Austerity

At the Group of Eight summit in Camp David Saturday, the leaders of the world’s wealthiest nations touted more government spending as a way for Europe to bring its ailing economies back to life. Although the leaders still emphasized the need for financial cutbacks, the emphasis on spending is seen as a significant shift from previous prescriptions from growth that always prioritized reducing debt and as well as fiscal reform, reports the Washington Post.

“Our imperative,” the leaders said in a statement, “is to promote growth and jobs.”

Germany’s Angela Merkel has long been the most staunch proponent of austerity as the prescription for Europe’s ills, but on Saturday she looked isolated. “Pundits may view this week as the first chapter of decline not only for the mightiest woman in Europe, but also for the German way of managing Europe's debt crisis in recent years,” writes Andreas Rinke in Reuters.

Although this hardly marks the end to the debate between austerity and spending, emphasizes the New York Times, the leaders took pains to highlight that any spending cuts have to take into account the situation of individual countries.

“There's now an emerging consensus that more must be done to promote growth and job creation right now,” President Barack Obama said, declaring that the summit had produced “genuine progress.”

Even though, “there were no bold prescriptions at hand,” the world leaders appeared to want to increase confidence in the global economy by agreeing to a broad strategy, points out the Associated Press.