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European Union Says No To Additional Stimulus

EU rejected calls for more government spending to help dig out of the recession despite nationwide strikes in France and gloomy unemployment figures in Britain.

BRUSSELS (AP) -- European Union leaders on Thursday rejected calls for more government spending to dig themselves out of the recession despite nationwide strikes in France, sagging company results in Germany and gloomy new unemployment figures in Britain.

Czech Prime Minister Mirek Topolanek, who is hosting a two-day EU summit that opened Thursday, called any more deficit spending "a deadly idea." He said EU nations need to know whether a euro200 billion ($270 billion) EU-wide spending package is working before digging into depleted state coffers for more.

EU leaders stood firm against new stimulus deals even after an announcement late Wednesday that the U.S. Federal Reserve will launch a bold $1.2 trillion effort to lower rates on mortgages and other consumer debt.

While that is aimed at increasing the amount of money in the economy, not the amount of government spending, it underlines the contrast between the European stance and a U.S. approach, which is piling on debt a lot faster.

"Trying to outdo one another with promises will certainly not bring any calm to the situation," said German Chancellor Angela Merkel, who has led calls for European fiscal restraint.

Both Merkel and French President Nicolas Sarkozy argue that excessive public debt threatens global stability and countries must move swiftly to pay off debt when they can.

European governments already resisted a push for more spending from the U.S. at a summit of Group of 20 finance ministers last week, and Thursday's remarks underlined their position going into an April 2 summit of G-20 national leaders in London.

"You cannot solve everything by using taxpayers' money. The huge deficit of the United States is a problem because it takes away resources for credit markets all over the world," said Swedish Prime Minister Fredrik Reinfeldt, who will take over the EU presidency in July.

European leaders say the EU's euro200 billion program over two years will be matched by automatic spending on rising unemployment benefits and social programs to help those hit hardest by the downturn.

The heavy impact of recession is hitting a growing number of Europeans.

When Sarkozy came to Brussels on Thursday, he left behind a nation disrupted by a wave of protests and strikes that disrupted transport and schools and which shared a common demand: more action to counter the recession and unemployment.

By mid-afternoon, tens of thousands of French protesters and workers were marching through streets from Paris to Marseilles. At the same time, news came that the French economy is shrinking at its fastest pace in over 30 years.

In Germany, the engine of Europe's economy, companies piled on more bad results Thursday. Chemicals producer Altana AG turned literary Thursday, saying it was "caught in the maelstrom" of the global crisis, with profits in 2008 down 25 percent.

Britain appeared headed toward the worst employment outlook since World War II: The government announced Wednesday that joblessness rose to 6.5 percent in the three months ending in January, with the number of people out of work reaching its highest in a dozen years.

Against that backdrop Europe's left is calling for more action.

"There is a broad agreement that we must do more than is in the package now," said Poul Nyrup Rasmussen, the leader of the European Socialists. "If we don't do more we risk having 25 million unemployed people at the beginning of next year."

About 18 million people are believed to be unemployed in the EU today, about 7.6 percent of the overall working population.

The first day of the EU summit centered on a fight over euro5 billion ($6.8 billion) for new power grids and green energy, and who should pay for the package. The European Commission wants to spend freely on projects that will decrease the environmental burden on the continent.

The EU wants to be at the vanguard of U.N.-sponsored global warming talks in Copenhagen later this year, but here, too, leaders are waffling.

EU leaders are trying to agree on how much aid to give to poor nations in exchange for support for a global climate change pact -- but are unlikely to agree on specific figures at the summit, according to officials with the EU presidency, currently held by the Czech Republic.

Instead, the EU presidency said it would wait for the United States to present its plans for fighting climate change first.

Environmental groups argue the EU is losing its credibility in fighting global warming. They say the EU should contribute around euro35 billion ($47 billion) a year by 2020 to poorer nations to help them cut emissions.

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