DEFENSE: German Foreign Minister Guido Westerwelle defended the policy of tightening the budgets in a number of European countries despite a blunt warning from a top European Union official on the sustainability of austerity.

GROWTH CONCERNS: EU Commission President Jose Manuel Barroso said higher taxes and lower spending may have hit the limits of public acceptance and effectiveness amid rising unemployment and recession. He said deficit reduction has to be complemented with an emphasis on short-term growth measures.

DEBT WORRIES: Westerwelle said giving up the policy would lead to a fall back of taking on new debt, and would cement mass unemployment in Europe for many years. He called fiscal consolidation and growth complimentary.