Europe’s tough measures expose trans-Atlantic rift

June 23, 2010 at 12:00a.m.

Associated Press

LONDON

A trans-Atlantic rift is growing over the right medicine for Europe’s financial crisis, with Britain announcing its steepest cuts in decades Tuesday and Germany defending its own austerity measures after a warning by President Barack Obama that budget-slashing could threaten the global recovery.

Britain’s emergency budget is the latest in a string of deep cuts in public spending and reflects new resolve in Europe, after Greece was pushed to the brink of bankruptcy and even threatened the bloc’s economic union, to tackle debt before worrying about growth.

As leaders of the Group of 20 economic powers prepare to assemble later this week in Canada, that single-minded focus is worrying the United States.

Obama wrote a letter to world leaders Friday warning against excessive spending cuts.

German Chancellor Angela Merkel fought back this week, defending her government’s $80 billion savings plan as British treasury chief George Osborne forged ahead with his own grim budget.

Many European analysts agree that taming deficits is the more urgent priority.

The British budget aims to sharply reduce record public debt.