G20 leaders agree to slash fiscal deficits by 2013

The leaders of the G20, which groups established world powers and the most dynamic emerging players, on Sunday pledged to slash back spiralling debts as they sought to rebalance a global economy rocked by financial crises.

Leaders at the G20 summit in Toronto agreed to cut national budget deficits in half by 2013, and vowed to nurture the still shaky recovery with coordinated measures to spur growth and ensure financial stability.

In a reversal from the unity of the past three crisis-era Group of 20 summits, the leaders decided to adopt "differentiated and tailored" economic policies for each country.

"The cohesion of the G20 was striking," host prime minister Stephen Harper of Canada said. "We're following different policies but with a single objective; to ensure growth and recovery in a durable and balanced way.''

He warned that ''fiscal consolidation is not an end in itself," reflecting concern from the United States and the emerging economies that European spending cuts could stifle domestic demand and dampen growth. "It is a simple reality that we are in a global economy and the global economy is determining where we are heading and our futures."

Harper's optimism aside sceptics pointed out that the agreements were not binding and that the culminating statement was replete with caveats and exemptions, postponing many tough decisions on to the next G20 summit in Seoul in November.