Lex: G20 deficits

The Group of 20 leading economies agreed a form of words on Sunday that allowed all sides to claim their deficit reduction strategy had won out but is likely to make little difference in practice. The communiqué on Sunday committed all countries to follow “growth-friendly fiscal consolidation plans”, halving their deficits by 2013 and stabilising the ratio of debt to gross domestic product by 2016. An exception was made for Japan, which can finance its large, persistent borrowing from domestic sources. Luke Templeman analyses the differing approaches to deficits in the US and Europe.