(CNN) - As world leaders prepare to meet in Toronto for the G-20 summit, disagreements are brewing over how the global economy's fragile recovery should best be steered.
The United States has been urging other countries not to pull back on stimulus plans too quickly. Britain, in contrast, has recently joined other European countries in announcing drastic budget cuts as fears grow about mounting public debt.
Leaders have begun arriving for the G-8 summit, which begins Friday, followed by the G-20 summit this weekend.
The last G-20 summit was September in Pittsburgh. Since then sovereign debt issues have clouded the global economic recovery. Dubai's debt worries in November foreshadowed the Greek debt crisis, which spiraled to other southern European nations. Public debt woes saw the value of the euro dip from $1.50 in December to below $1.20 in May, sparking fears the 17-nation bloc united under the currency may collapse.
U.S. President Barack Obama fears a roll-back too soon from government stimulus packages would send the world back into recession. The European Union has sent a letter to all G-20 leaders asking for substantial budget cuts to come no later than 2011.
"The Germans are worried about the knock-on effects of southern Europe financing. And the Americans, not having experienced that problem, don't recognize it and they don't understand why countries should be cutting back when in fact the recovery is at such a nascent stage," said Simon Evenett of the Center for Economic Policy Research.
Also high on the agenda will be reforms to global banking regulations. Although all G-20 nations pledged banking reforms, the reforms being mooted in Europe and North America are diverging. Britain, France and Germany are calling on taxes on banks to pay down deficits and cushion future financial shocks.
The U.S. wants to discourage additional taxes, which officials fear will stunt consumer demand.
"Behind the calls for us to pursue a more expansionary fiscal course lie two different approaches to economic policymaking on each side of the Atlantic," German Foreign Minister Wolfgang Schäuble wrote in a Wednesday op-ed piece in the Financial Times. "While U.S. policymakers like to focus on short-term corrective measures, we take the longer view and are, therefore, more preoccupied with the implications of excessive deficits and the dangers of high inflation."
UK Treasury Chief Secretary Danny Alexander said: "We will have to see what comes out of the G-20. I'm not going to give any forecast on that. I think it is important that we have acted because we recognize the risks the banking system poses to the U.S. economy. Certainly, France and Germany recognize those risks, also."
The sessions will offer a first appearance on the world stage for British Prime Minister David Cameron and Japanese Prime Minister Naoto Kan. Both leaders arrived in Toronto on Thursday. Other leaders are arriving Friday.
– CNN's Jim Boulden contributed to this report
The current administration had best listen to the EU folks. It's a certainty, they're not listening to the American People. STOP SPENDING, It's not working!!!!!!
Obama wants to keep spending like a drunken liberal sailor while the rest of the world understands the need to reign in out of control spending. Hmmm, Obama campaigned on wanting to listen more closely to other countries rather than acting unilaterally. Heres to hoping that he follows that logic!!!
Can't borrow your way out of debt.
The solution is simple: whatever you've been doing is clearly not working, so try something else. Stimulus, handled correctly, can get things going again. A combination of stimulus, i.e., money to the people and austerity, i.e., public officials all over the world, taking pay cuts could help too. I don't know about Europe, but in America, we pay our 'public servants' a lot of money and give them many perks. If our Senators and Congressmen would pay for their own healthcare or kick in more of their own money, our Federal budget might get a bit smaller.
Shared sacrifice, with the people on the public payroll, and I mean the high earners, and austerity could just work. But what is going to happen is that they will all discuss it, ho-hum around, look official and nothing will get done in the end and who knows where it will all end.
Obama and the DEMs are spendaholics. We've spent enough...time to pull back a bit.
If we cut back on public debt we could not continue to support everyone on money we borrow from China.
Hear we go a bunch of other country's coming together to beg for money I hope it dont cost us to much to buy support for Obamas energy agenda .
Stimulus vs Austerity? They're both wrong!
Unleash the power of individual freedom by abolishing income tax, cutting the federal government back to its original Constitutional size, passing a Balanced Budget amendment, and instituting term limits for elected officials (they've become a ruling political class).
Wake up people! In November 2010, vote American, vote Republican.
The rest of the world can see what Obama is doing here with all the spending isn't working.
My question is wy don't w wake up and get a real leader in the WH.
so the Europeans are suggesting fical responsibility?? Obozo is not going to like that
All of the countries around the world need to stop borrowing and spending, stop taxing and spending, stop making government bigger and bigger!!!! We need everyone to work. We need workers to care about the quality of their work. We need everyone to pay at least some taxes. We need to stop social programs that encourage laziness. This is how we can balance our budgets and how we can make our world a better place.
Stimulus Vs Austerity? No brainer. What do you do when you've spent all your paycheck, and all your credit cards are maxed out?
Beans and mac'n'cheese time......
U.S. President Barack Obama fears a roll-back too soon from government stimulus packages would send the world back into recession.
... thoroughly rejecting the indisputable data indicating failure of the massive stimulus program he and his Democratic brethen in congress have implemented in the US. Apparently he is serious. Huh?