Those reluctant Germans

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: households are inclined more to save than to spend. For these reasons Mervyn King, the governor of the Bank of England and a pillar of policy rectitude, has endorsed Britain’s fiscal stimulus. The bank’s chief economist, Charlie Bean, told politicians this week that the frailties of the financial system mean interest rates may need to be cut “aggressively”.

Policymakers in the euro area seem instinctively wary about such policy activism. Germany’s government has low borrowing costs and a broadly balanced budget, so is best placed to throw some cash around. But the fiscal package it announced earlier this month was modest—euro 12 billion over two years, just 0.25% of GDP. And on November 26th Angela Merkel, the German chancellor, hit out at those who say Germany should do more and criticised the loosening by other countries. The commission made it clear that the prospect of a deep recession means the rules that cap budget deficits at 3% of GDP will not be applied rigidly. That gives France and Italy, which are close to the limit, some room for manoeuvre. But Germany would need to play a big role in the commission’s plan, worth 1.5% of EU GDP. “If Germany plays a tight game, it makes it harder for other countries to loosen their fiscal policy,” says Mark Wall, an economist at Deutsche Bank.

The ECB seems a bit cautious too. On November 25th Lorenzo Bini Smaghi, a member of the bank’s rate-setting council, argued that slashing interest rates to insure against a deep downturn can harm confidence, as well as limiting policymakers’ future options. Still, the ECB cut its interest rate on Thursday as did the Bank of England.

But the degree of unorthodoxy being contemplated in America seems a way off. A money-financed tax cut would require co-operation between national governments and central banks, and would have to be consistent with explicit inflation objectives. That may prove easier in Britain than in the euro area, where co-ordinating even a conventional fiscal stimulus between 15 separate countries is proving so tortuous.