Thursday, Dec 11, 2008
The German finance minister has launched a highly unusual attack on Britain’s economic stimulus package, saying it will not fend off recession but will leave the next generation saddled with debt.
In an interview with Newsweek magazine, excerpts of which were published Wednesday, Peer Steinbruck said the government’s switch from financial prudence to heavy borrowing was “breathtaking” and “crass Keynesianism”.
He accused Prime Minister Gordon Brown’s administration of “tossing around billions” with its 20-billion-pound stimulus plan to cut tax on goods and services, funded by borrowing more and increasing taxes after 2011.
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It is highly unusual for a diplomat to be so publicly critical of an ally’s policies, and Steinbruck’s remarks will only add to simmering tensions between Britain and Germany on the eve of a European Union summit.
“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 pounds instead of 39.90 pounds?” Steinbruck told the magazine.
“All this will do is raise Britain’s debt to a level that will take a whole generation to work off.