11 Dec, 2008

Germany Slams PM’s ‘Crass’ Cure

As European leaders gather in Brussels, the German finance minister has launched a blistering attack on Gordon Brown’s economic rescue plan. In an interview with Newsweek magazine Peer Steinbruck derided the £20bn package and accused Mr Brown of “tossing around billions” which would saddle a generation of taxpayers with debt. The unprecedented broadside described the Government’s switch to a “crass Keynesianism” to try to spend its way out of the economic crisis as “breathtaking”. Mr Steinbruck said: “Our British friends are now cutting their value-added tax. We have no idea how much of that stores will pass on to customers. “Are you really going to buy a DVD player because it now costs £39.10 instead of £39.90? All this will do is raise Britain’s debt to a level that will take a whole generation to work off. “The same people who would never touch deficit spending are now tossing around billions. The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking.” Mr Steinbruck’s remarks were seized on by the Tories. “This comment from the German finance minister totally demolishes Gordon Brown’s central political charge that only the Conservatives oppose his expensive and ineffective VAT measures,” said shadow chancellor George Osborne. But Secretary of State for Children and Schools, Ed Balls, told Sky News: “Peer always has strong and robust views but this says far more about the current state of coalition politics in Germany. “They are arguing in Germany about the right way to go. “When that politics is resolved, we will find Germany joining the consensus of countries around the world that know that action now to support our economies is the right thing to do. “We will find that the Conservatives are the only people who are standing out against this.” Mr Steinbruck’s outburst may have knocked hopes of a united front at the EU summit to put stability and confidence back into the European economy. French President Nicholas Sarkozy, chairing the talks, has said in a letter to fellow leaders: “We shall be required to take a series of decisions with highly significant implications for the future of Europe. “I am determined that the European Council lives up to its responsibility and to citizens’ expectations and I am sure that each one of us will be able to show the vision and spirit of compromise necessary for success.” But it could now be hard to display EU summit solidarity on the terms of the European Commission’s recommended £160 billion economic recovery package.

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