At Saturday’s G-8 summit, German Chancellor Angela Merkel — under urging from U.S. President Barack Obama and French President Francois Hollande — signed onto a statement that called for mixing painful cutbacks with growth-promoting measures to deal with a crisis that threatens the global economy.

The leaders warned that budget deficits have to come down. But they also acknowledged that an approach that’s based mostly on austerity and longer-term reforms can’t help countries out of recessions this year or next. That’s the approach that has dominated the continent’s German-led attack on the crisis since it erupted in late 2009, when Greece admitted its finances were broken.

“Our imperative is to promote growth and jobs,” leaders said in their final declaration after Saturday’s summit. While they “commit to fiscal responsibility,” the leaders also supported spending on education and public works. They also said heavily indebted countries should have the chance to fix their budgets in ways that take into account how well their economies are doing at the moment and support “confidence and economic recovery.”

They said little about specific steps and left exactly what to do up to individual countries, saying they recognize “the right measures are not the same for all of us.”

The statement comes as markets look ahead to an informal European summit meeting Thursday, and to a June 17 election in Greece. An indecisive poll May 6 left no Greek party with enough votes to govern. A new government that rejects the austerity required under bankrupt Greece’s €130 billion bailout from other eurozone countries could lead to it leaving the euro and spreading financial chaos.

Cornell University economist Eswar Prasad said the statement splits the difference among the leaders positions and said Merkel, a chief advocate of austerity, had not altered her stance. The language “is cautious and guarded and leaves much room for difference of opinion so that each of the G-8 leaders can go back and say they got the other leaders to agree.”

“Market expectations for the summit were quite low and those expectations have been met,” he said. “I don’t think this is going to make much difference for markets.”

At the summit, Merkel openly rejected any sense that a pro-growth stance meant stimulus spending. It’s a stance fed by annoyance among voters at home that Germany, which backs the biggest share of the European bailout fund, is helping rescue countries that were not careful with their finances. Germany faces national elections next year.

So where will growth come from?

In their summit fudge, European leaders were in effect recognizing limited steps that are already taking place in a modest and informal growth program. It’s clear that the slack economy in Spain, for instance, means the country will not reach its target deficit of 3 percent of gross domestic product by next year, in effect taking more time to meet EU budget rules.

The slipping target underlines the austerity trap: To keep borrowing money by selling bonds to investors, Spain must show it is reducing its deficit, which was 8.9 percent of GDP last year. So it is severely cutting back spending. That removes stimulus from the economy. Partly as a result, the economy sank into recession. And as companies and people make less money, they pay less in taxes. The cutbacks make balancing the budget even harder.

In addition to letting deficit targets slip, European officials have talked about adding money to the European Investment Bank, a development bank that loans money for public projects, and finding ways to make quicker use of unspent EU aid funds that are typically used for things like roads, water treatment plants and ports to help poorer EU members catch up.

Prasad said such spending of EU funds could be “potentially useful if they can be packaged in a way that is politically acceptable in Germany.”

Another trend happening in the background is larger wage settlements in Germany. Germany dominates as an exporter because it kept labor costs down with reforms in 2004. Some think less restraint on pay could boost consumption and spending on imports at home and even out trade imbalances within the eurozone. The top industrial union, IG Metall, won a deal for a 4.3 percent raise over 13 months in a key region in southwestern Germany over the weekend.

It’s a trend that officials can bless, but it doesn’t require action on their part.

Yet economists say that emerging measures such as slower deficit reduction and more EU infrastructure spending, while helpful, will not enough. Not enough money is involved.

A bolder growth strategy could include movement toward some form of group borrowing among all 17 eurozone countries to pay for public works projects, said Marc Ostwald, strategist at Monument Securities in London. That could be a prelude to eurobonds — collective borrowing and central control of budget spending. “The thing they absolutely have to decide is how they’re going to move toward fiscal union,” said Ostwald. “Germany may not want eurobonds right now, but there are going to be eurobonds.”

Ostwald and other economists say dealing with Europe’s banking system, on shaky ground for several years, would be one of the strongest measures Europe could take now.

An EU-wide guarantee for bank deposits could shore up depositors’ confidence their money is safe no matter what happens at the national level. An EU-wide banking regulator with the power to force banks to restructure would improve the flow of credit and boost confidence. Europe’s shakier banks are heavily dependent on emergency credit from the European Central Bank, a situation that has persisted for several years, starting with the onset of the global financial crisis.

“We have had a damaged financial system since 2007 and 2008 but it has never been addressed,” said Nicolas Veron, senior fellow at economic think tank Bruegel in Brussels. He advocates a task force to restructure troubled banks along the lines of the one that led a restructuring of the U.S. automobile industry, in which General Motors and Chrysler shed debt and reshaped their businesses under bankruptcy court protection.

“As long as we have a sick financial system, it will be very tough to get investment and consumption back to levels compatible with robust growth in the eurozone,” Veron said.

Yet all those more decisive solutions face obstacles. Germany is against collective borrowing to help more indebted countries, fearing it will pay the freight as the biggest eurozone member. National governments are reluctant to give up control over banks, wanting to promote their own financial industries. Letting countries slow down deficit reduction will only roil markets unless it is seen as part of a genuine effort to fix finances in the long term.

“There is no miracle,” said Veron. “It is going to be a long hard slog in the best of scenarios.”

The new parliament will hold power just one day because the election left no party with enough votes to form a government, forcing repeat elections next month. Recent polls show falling support for Golden Dawn, so it’s not certain to make it into parliament again. Still, many people across Europe are troubled.

“The Golden Dawn party is a dark stain on European politics,” said Moshe Kantor, president of the European Jewish Congress. “For the first time in over six decades a seemingly long hidden Nazi ideology returned to power.”

Here are other far right parties that have won parliamentary seats and pushed their views into mainstream policies and discourse in Europe, sometimes in ways that have impacted immigrants and Muslims.

FRANCE

France’s anti-immigrant National Front was in parliament until 1986, when new rules made it harder for small parties to make it in. Its leaders, first Jean-Marie Le Pen and now his daughter Marine, have featured prominently in presidential elections and maintained a national following. Marine Le Pen came in a strong third place in presidential elections this month, earning more than 6 million votes, and is angling to get National Front candidates back in parliament in legislative elections next month.

While Jean-Marie Le Pen has been convicted and fined a few times for racism and anti-Semitism, Marine Le Pen has sought to soften the party’s message, and turned its anger toward what she calls the “Islamization” of France. Those ideas have entered the mainstream discourse, notably in former President Nicolas Sarkozy’s push to ban face-covering Islamic veils and keep halal meat out of public cafeterias. He also made reducing immigration a pillar of his presidency.

AUSTRIA

The right-wing Freedom Party consistently polls a close second in popularity to the leading Social Democrats, reflecting the resonance of its anti-immigrant, Euro-skeptic message. It counts the neo-Nazi fringe among its supporters and its leaders’ occasional anti-Semitic comments are widely condemned by other parties. Its main draw with voters is Islamophobia. It holds 34, or 1.5 percent of the seats in parliament compared to the nearly 27 percent won in 1999. That result catapulted it into a government coalition — and led to EU sanctions against Austria. In response to their gains, the federal government has toughened asylum rules and introduced compulsory German courses for immigrants.

NETHERLANDS

The Freedom Party of anti-Islam lawmaker Geert Wilders became the third largest bloc in the Dutch Parliament in 2010 elections with 24 seats. The result turned Wilders into a kingmaker who agreed to support the minority coalition of Prime Minister Mark Rutte on crucial votes in return for concessions such as a crackdown in immigration and a ban on the Islamic veil, the burqa. Wilders, a Euro-skeptic, brought down Rutte’s government last month when he refused to support an austerity package aimed at cutting the country’s budget deficit to within the EU norm of 3 percent of GDP.

ITALY

The Italian Social Movement, which saw itself as the heir of Benito Mussolini’s Fascist party, was Italy’s fourth largest party in the decades after the war, gaining up to 6 percent in some cases. But mainstream parties refused any alliance with it so it was kept out of the postwar governing coalitions. It campaigned against immigration and sought tough law enforcement, and some fringe members were linked to right-wing violence. In the early 1990s it morphed into the National Alliance and under party leader Gianfranco Fini moved into the mainstream: It shed its hardline roots, decried anti-Semitism and Mussolini’s racial laws, and became a major ally of ex-Premier Silvio Berlusconi. Fini had to pull back from a statement in a newspaper interview that Mussolini was one of the greatest statesmen of the 20th century.

HUNGARY

Hungary’s Jobbik party — The Movement for a Better Hungary — won nearly 17 percent of the national vote in the 2010 parliamentary elections and is currently the second-largest opposition party in the legislature, behind the Socialists. Jobbik’s popularity is highest in Hungary’s northeast region, the country’s poorest, and some of its support came from its pledge to fight what it calls “Gypsy crime.” From 2009, uniformed groups closely tied to Jobbik, such as The Hungarian Guard, set up patrols in countryside villages to “protect” residents from Gypsies, but such activities have been banned under the current, center-right government of Prime Minister Viktor Orban. The Guard and several other such groups use some colors, slogans and symbols of the far-right nationalist parties of the 1930s, and its rhetoric is sometimes anti-Semitic, racist and anti-gay. Racist comments by Jobbik deputies have drawn condemnation from the rest of the parties and Orban’s governing Fidesz party’s two-thirds majority has allowed it to not make any concessions to Jobbik in the legislature. At the same time, some of the themes Jobbik promotes can also be found to a smaller or larger degree in Orban’s policies.

DENMARK

The anti-immigrant Danish People’s Party is Denmark’s third largest party and has pushed the country to adopt some of Europe’s strictest immigration laws, leading to a drastic cut in the number of refugees seeking shelter there to just over 5,000 in 2011, from 13,000 in 2001. Last year, it also pushed through a plan to reinstate custom checks at Denmark’s borders with Germany and Sweden. Both the European Union and Germany sharply criticized the move, with the EU accusing Denmark of violating the spirit of EU rules on free movement for goods and people.

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Associated Press writers Elena Becatoros in Athens, Angela Charlton in Paris, George Jahn in Vienna, Victor Simpson in Rome, Mike Corder in Amsterdam, Pablo Gorondi in Budapest and Louise Nordstrom in Stockholm contributed to this report.

Europe’s woes have a direct bearing on the U.S. economy and thus Obama’s re-election prospects. American economic growth depends on the success of the 27-nation European Union, a bloc that is America’s biggest trading partner.

The outlook is gloomy, with prospects of a Greece collapse looming and eight of the 17 eurozone countries mired in recession.

Republican presidential contender Mitt Romney regularly accuses Obama of trying to transform the U.S. into “a European-style social welfare state.” Obama is leading the nation down the same path as Greece, Romney says, a claim he’s likely to expand as Greece’s banking crisis deepens.

Obama will have a hard sell in persuading hard-pressed European NATO members in Chicago to increase support for Afghan security forces. Romney has criticized Obama for announcing a troop withdrawal timetable— but also suggests he’d bring U.S. troops home as soon as possible.

One sign that U.S. presidential politics is at play may be in who’s not coming.

Russian President Vladimir Putin, facing unrest at home, is skipping the Camp David summit. Putin has signaled he’ll hold off on any major new cooperation with the United States until he knows who will be president.

Romney has called Russia an “enemy.”

He campaigned Thursday in Jacksonville, Fla. Preparing for the summits, Obama scheduled no public appearances.