For much of the year, the public debate among economists and policymakers in Europe has been over whether it is time for austerity measures or more stimulus.  Olivier Blanchard and Carlo Cottarelli--chief economist and head of fiscal affairs, respectively, at the IMF--write in today's Financial Times that both are necessary:

The future goal is to achieve what the G20 terms “strong, sustainable, and balanced growth”. This surely requires a return to fiscal sustainability, which demands credible medium-term fiscal plans. The first goal should be to stabilise debt-to-GDP ratios. To do this over the next five years means an average improvement in structural budget deficits of 1 per cent a year in G20 countries. Continuing roughly at this rate for five more years and then stabilising would bring down average debt levels to 60 per cent of GDP by 2030.

None of this should be controversial. Indeed, the divisions between fiscal tightening advocates and their opponents are often more apparent than real. The former are usually really talking about tightening in the 2011 budget cycle; from a fiscal standpoint, 2010 is already behind us. The latter are not always opposed to lower deficits in 2011, given the scale of the current stimulus that is now being withdrawn as planned.

Still, some clearly prefer more front-loaded consolidation, others less. Front-loaders point to the need to maintain credible fiscal policy, which is hard to gain and easy to lose. They note that market perceptions of fiscal health can shift in a heartbeat, so countries must move pre-emptively. 

Read The great false choice, stimulus or austerity here.