DISPUTES BETWEEN the EU and the US over how to combat the global recession widened yesterday as EU governments made clear they had little appetite for piling up more debt to fight the collapse in output and jobs.

EU finance ministers insisted in Brussels that the 27-nation bloc was doing enough to support world demand and did not need to adopt another fiscal stimulus plan, as Washington is urging.

The differences are casting a shadow over next month’s summit in London of leaders from the G20 group of advanced and emerging economies, an event to be attended by Barack Obama on his first visit to Europe as US president.

The critical condition of Europe’s economy was underlined by official data yesterday which showed that French industrial output slumped at a year-on-year rate of 13.8 per cent in January, the worst decline since records started in 1991.

France, Germany and Italy, the euro zone’s three biggest countries, are anxious that the 16 countries sharing the euro should not run up ever bigger budget deficits and public debt, potentially threatening its stability.

The joint EU finance ministers’ statement, said: “The focus should now be on swift implementation of planned fiscal stimulus packages to avoid that the recession becomes entrenched . . . Once the recovery takes hold, an orderly reversal of the macroeconomic stimuli is warranted.”

Ben Bernanke, chairman of the US Federal Reserve, warned yesterday against expecting too much from the G20 summit. - ( Financial Timesservice)