Merkel stands by debt crisis plan

Germany and the United States appear set for a showdown at this weekend's G20 summit in Canada after Chancellor Angela Merkel rejected warnings from President Barack Obama that Europe's attempts to save its way out of the debt crisis could put global economic growth in danger.

Germany has the Continent's largest austerity package, which will see up to €80 billion ($138.5 billion) of spending cuts imposed. Spain has unveiled a €15 billion savings programme and Britain its biggest austerity packages since World War II.

Washington is concerned sudden belt-tightening will put a brake on the global economy.

Merkel said: "Good savings programmes speed up private consumption because they give people a sense of security."