Europe has no more room to spend through increased budget deficits, European Commission President Jose Manuel Barroso said, stressing fiscal consolidation was necessary to rebuild confidence for growth.
He said the fiscal tightening in the 27-nation European Union would be differentiated among countries, with those who already have large deficits tightening policy more quickly.
"It will not be a change overnight but there is no more room for deficit spending," Barroso told a news conference ahead of a summit of the world's 20 biggest developed and developing economies.
Barroso said European fiscal policy would remain expansionary in 2010 and tightening would only slowly start in 2011.
"Fiscal tightening is not an end in itself, it is a means to restore confidence," Barroso said, stressing that without restoring investor and consumer confidence there could be no growth.
He said Europe would not press all other G-20 countries to follow its example.
"Situations are very different in different parts of the world," Barroso said.
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