EU Ministers to Debate More Stimulus

Wall Street Journal
October 2, 2011

European Union finance ministers this week will discuss whether governments with the strongest public finances can provide some budget stimulus to help support flagging economic growth in the 27-nation bloc.

The debate, set for a meeting in Luxembourg on Tuesday, could signal a small reversal of a policy adopted by ministers in October 2009 that calls on all EU countries to start cutting their deficits in 2011. With postcrisis economic growth much slower than expected, the EU is under pressure from the International Monetary Fund and the U.S. to consider more stimulus.

The European Commission, the EU's executive arm, sought to debate the idea at the meeting, EU diplomats said. The idea is that countries not violating the EU's deficit limit of 3% of gross domestic product could allow their "automatic stabilizers"—government spending programs such as unemployment benefits that tend to rise during a slowdown—to operate without restrictions.

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