Japan’s prime minister has dismissed Germany’s warnings about the dangers of excessive public spending in the downturn, saying Berlin had failed to understand why strong fiscal action was vital for recovery.

Taro Aso’s remarks – made in an interview with the Financial Times – highlight the wide differences between global leaders about how to combat the global recession as they head to London for tomorrow’s G20 meeting.

Angela Merkel, German chancellor, warned last week that spending more public money in a co-ordinated stimulus risked creating an unsustainable recovery.

But Aso said Japan’s fiscal stimulus policies played a critical role in restoring growth after the country’s asset price bubble burst in the early 1990s.

Financial Times