Germany attacks UK over economy

Thursday, 11 December 2008 2:56 PM

An unprecedented spat has broken out between Germany and the UK, with the German finance minister calling Gordon Brown's financial policy "crass".

In an interview with Newsweek magazine, Peer Steinbruck criticised the decision to cut VAT and raise national debt.

He condemned the borrowing levels as "breathtaking".

Downing Street have already hit back at the statements, saying Germany was "out of step" in its handling of the financial crisis.

"Are you really going to buy a DVD player because it now costs £39.10 instead of £39.90?" Mr Steinbruck said about the VAT cut.

"All this will do is raise Britain's debt to a level that will take a whole generation to work off."

"The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking," he continued.

Children's sectretary Ed Balls said the statement had more to do with internal German politics than it does with the UK.

"I have known him for many years," Mr Balls said of Mr Steinbruck.

"He always had strong and robust views but this says more about the current state of coalition politics in Germany. When that is resolved you will find Germany joining the consensus around the world.

"The Conservatives are the only people in the whole of the world standing out against this. They are out of step with the times."

Liberal Democrat economics spokesman Vince Cable said: "Steinbruck and his colleagues are pretty fed up with being lectured to by Gordon Brown on how to run their economy, particularly as they avoided some of the most serious difficulties that have affected the UK."

The degree of criticism, and its presence outside closed doors, is very rare in diplomatic circles.

The Tories have seized on the comments as proof they are not alone in objecting to government policy.

"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 secretary George Osborne.

"On the day he claimed to be saving the world, the world answered back."

The crticism comes as the pound falls to a record low against the euro.

Cash injections form the centre-piece of chancellor Alistair Darling's plan to revive the UK economy, with £20 billion being used.

Most other European government have opted for some form of financial stimulus. Germany has pumped 480 billion euros into the economy while France has spent 26 billion euros.

Gordon Brown is attending an EU summit today. He will meet chancellor Angela Merkel, but not Mr Steinbruck.

UK borrowing is expected to hit £15 billion next year.

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• europe
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• foreign policy