April 19 - Finance ministers will debate countries' debt levels at the G20 this weekend as the world's biggest economies rethink austerity. Kirsty Basset reports
Protests over austerity have become a common sight in Europe. But whether countries have been cutting too much, too fast, is shaping up to be a hot topic of debate at this weekend's G20. European countries in particular have undertaken massive austerity drives in recent years to cut their debt. But those efforts have at times damaged already weak economies. Head of FX strategy at CIBC Jeremy Stretch says the debate is far from over. (SOUNDBITE)(ENGLISH) HEAD OF FX STRATEGY AT CIBC, JEREMY STRETCH SAYING: "Well I think there's an ongoing battle between the different wings of economic orthodoxy in terms of the deficit argument and whether a number of economies are going too far and too fast in terms of the deficit reduction plans, whether those deficit reduction plans are then themselves causing greater problems. And I think it's very much a case that that intellectual battle is ongoing not just within the economic orthodoxy but also going on within the IMF and I think that's going to be a subtext which is going to continue over the course of today and the meetings over the weekend but also probably in the upcoming weeks." Britain's so-called 'Plan A' of deficit reduction is set to come under particular scrutiny next month when the IMF arrives in London to make its annual assessment of the British economy. IMF managing director Christine Lagarde says there may be room for Britain to tweak its pace of austerity. (SOUNDBITE)(ENGLISH) MANAGING DIRECTOR OF THE INTERNATIONAL MONETARY FUND, CHRISTINE LAGARDE SAYING: "We clearly support the policy. And we have said so repeatedly. However we've also said repeatedly in the last couple of years and I will not prejudge what we'll do with the next Article IV, we've also said that should growth abate, should growth be particularly low, then there should be consideration to adjusting by way of slowing the pace." The austerity debate was turned on its head earlier this week - after an influential study by economists Carmen Reinhart and Kenneth Rogoff was disputed. They say economies slow dramatically when the debt to GDP ratio goes above 90 per cent. But now their findings have been challenged by researchers at the University of Massachusetts who say the decline in growth is actually much milder. G20 finance ministers meeting in Washington this weekend are set to discuss specific targets for reigning in debt levels. And with the UK teetering on the brink of a third recession in five years, it's a debate with a great deal at stake.