As leaders from the Group of 20 nations begin meeting in Toronto, there are worrisome signs the co-operation that once muted the recession's impact has frayed.

The urgent issue now, just as it was when G20 leaders convened after the financial crisis of 2008, is the co-ordinated fiscal stimulus (in plain English, deficit-fuelled public spending) that did so much to prevent this crisis from snowballing into a global depression.

In 2008 and 2009, the need was for co-ordination in pouring public money into faltering national economies; today, it's for co-ordination in withdrawing this support.

But without an immediate crisis to confront, the impressive co-operation of the past two years is hard to keep together.

Some European countries, led by Britain and Germany, seem determined to impose austerity measures immediately.

But United States President Barack Obama warned yesterday that too much haste could bring a relapse into recession. Prime Minister Stephen Harper sounded a similar note, calling on G20 countries to follow through on stimulus plans even as he urged them to craft strategies that would cut deficits in half by 2013.

Why the big change in European attitudes? The psychology of public spending has seemed to do a screeching turnabout since spring, when anxiety rocked financial markets as frightened investors awaited a European rescue plan for Greece's unsustainably huge public debt.

As a result, national leaders, who had some leeway in timing their commitments to deficit-cutting a few months ago, may no longer have this luxury.

"It's urgent to say something (about deficit-cutting strategy), even for countries like Canada that don't have the problems that others do," said Daniel Schwanen, an economist with the Centre for International Governance Innovation.

The belief by key European leaders that the region's lagging growth would need public support until the

private sector showed more signs of healing seems to have reversed in a matter of weeks. Fear of a bond-market revolt against high deficits has brought a determined focus on slashing public spending.

There's no question that countries like Greece, and even Britain, have an urgent need to demonstrate they can squeeze government deficits over the next few years, says Glen Hodgson, chief economist with the Conference Board of Canada.

But a number of economists agree with Obama's concern that premature spending cuts in countries like Britain and Germany, which can still borrow cheaply, could do more harm than good,

Nobel Prize-winning economist Paul Krugman of Princeton University calls the idea of immediate, sharp spending cuts foolish, noting that such a move deepened and prolonged the Great Depression in the U.S. when then-president Franklin Roosevelt decided in 1937 that it was time to balance the federal budget.

Hodgson notes that taking away the support of public spending before private investment and consumption have revived "looks like the condition for a double-dip" recession.

The problem of timing a country's deficit-fighting is complicated by the fact that some are in much better shape than others. Canada, for example, should grow by a robust 3.5 per cent this year, Hodgson estimates. Its debt is low and the federal deficit will be well below the estimate in last year's budget.

The U.S. has a shakier recovery, with little employment growth, so Obama's focus on maintaining some government stimulus makes sense. And most European countries are facing much slower growth than either Canada or the U.S., making their new focus on immediate budget-cutting a risky bet.

The best possible outcome next weekend, perhaps, would be an agreement on the principles that should guide spending policy and a joint commitment to fiscal sustain-ability.

Something like that could give financial markets added confidence in sovereign debt without pushing any country to move too hastily.