Germans rubbish Brown's economic policy again!

After Peer Steinbrück, the German Finance Minister, ridiculed Brown's economic policy on Wednesday, another German politician has done the same.

This time it was Steffen Kampeter, who speaks on economic policy for Chancellor Angela Merkel's CDU party. This is significant because yesterday Ed Balls claimed the comments from Steinbrück had more to do with Germany's internal politics in its ruling coalition than the nature of the global response to the economic downturn. He said: "I think Germany will join the international consensus when their internal politics are sorted out." But, as i argued at the time, this was complete Balls. I wrote: "Peer Steinbrück is a member of the Social Democratic Party which is a left of centre party. If anyone in Germany's coalition government is going to embrace a Keynesian borrowing and spending splurge surely it would be Steinbrück and the SDP?"

Now Steffen Kampeter has entered the debate, describing the British government's moves to raise debt as "a failure of Labour policy" and completely dismissing Balls's argument. Remember, Kampeter comes from the CDU Party (Merkel's party) whereas Steinbrück comes from SDP. Kampeter said:

"Peer Steinbruck's comments have nothing whatsoever to do with internal German politics, as Prime Minister Brown has suggested. The tremendous amount of debt being offered by Britain shows a complete failure of Labour policy. In questioning the British government's approach, Peer Steinbruck is exactly expressing the views of the German Grand Coalition. After years of lecturing us on how we need to share in the gains of uncontrolled financial markets, the Labour politicians can't now expect us to share in its losses. The tremendous amount of debt being offered by Britain shows a complete failure of Labour policy."

It is true that Angela Merkel has supported a fiscal stimulus across the EU - something the Labour government has latched on to claiming the Germans agree with them - but she insists, like the Conservatives do in Britain (and the IMF), that it has to be fully-funded.

At the end of last month, Merkel expressed her disapproval to Gordon Brown’s drive to stimulate the world (FT Blog). She told the Budestag (German Parliament):

“Excessively cheap money in the US was a driver of today’s crisis. I am deeply concerned about whether we are now reinforcing this trend through measures being adopted in the US and elsewhere and whether we could find ourselves in five years facing the exact same crisis.”

She holds this view even though Germany starts from a position of a balanced budget and a trade surplus - unlike us. The Germans have always been wary of growth financed by debt. If only Gordon Brown had managed the British economy so that we were in such a good position to face this recession as our German neighbours - the world's 3rd largest economy.

So why are the German's gunning for Brown? Benedict Brogan reckons it is payback time for all the years Brown used to lecture the Europeans boasting about how great his management of the economy was. Now he is portraying himself as the saviour of the world, the Germans have had enough of his egotistical hubris and have decided to hit back, especially as they think his boasting is misplaced as the British economy is particularly vulnerable. Brogan wrote:

"The relish with which the German finance minister has mocked Gordon Brown's "crass Keynesianism" is delightful to behold. Years of resentment have come bubbling out, with devastating effect. Remember how Mr Brown used to enjoy lecturing the Germans and the rest of the EU for their economic failings? Well, the jack-boot is on the other foot. You can bet that Peer Steinbruck's outburst was in part motivated by a desire to rub the PM's face in his economic mess. Think of all those Ecofin summits when Mr Brown would deliver his lecture ahead of time through the media, and then either not turn up or leave in a rush without staying for lunch... The German offensive against Mr Brown is a reminder that there are quite a few out there who may endorse the principle of a fiscal stimulus package - but only if you can afford it."

I'm really warming to Germans at the moment... I'll be raising a glass to them this Christmas. Makes one feel proud to be European! ;)