Gordon saves world? Nein! Say Germans

Government Finance Minister finally talks sense on the economy. Unfortunately he is German, not British!

On the day that Gordon Brown claimed he had saved the world (and I know it was a slip but he actually believes he has), Peer Steinbrück, Germany's Finance Minister, ridiculed Brown's fiscal stimulus economic rescue plan telling Newsweek magazine: "The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking."

Steinbrück also attacked credit-financed growth (which has been responsible for Britain's boom years): "When I ask about the origins of the [financial] crisis, economists I respect tell me it is the credit-financed growth of recent years and decades. Isn't this the same mistake everyone is suddenly making again, under all the public pressure?"

The outspoken German Finance Minister also attacked Brown's fiscal stimulus, especially his decision to cut VAT: "The speed at which proposals are put together under pressure that don't even pass an economic test is breathtaking and depressing. 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."

When asked whether extraordinary times called for extraordinary measures (something Brown has repeatedly claimed), Steinbrück was scathingly dismissive: "It's the yearning for the Great Rescue Plan. It doesn't exist. It doesn't exist!"

And when asked about the politics of "doing something" vs "doing nothing" (as Brown likes to reduce the debate), Steinbrück said: "... I'd say the risk is greater of burning money without significant effects and in the end having a budget weighed down with even more debt."

So much for the global consensus, hey Gordon!

Brown claims he has been leading the world, travelling to summit after summit in an effort to persuade fellow world leaders that his "fiscal stimulus" policies should be repeated. But he hasn't even been able to convince Europe's largest economic power of the merits of his actions.

George Osborne, leapt on Herr Steinbrück's remarks: "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." Osborne also said, referring to Brown's claim to have "saved the world": "On the day he claimed to be saving the world, the world answered back."

I'd say Cameron and Osborne have somebody new to put on their Christmas card list!

UPDATE: Brown has said in an interview in the Sun (with Alan Sugar) that "we do need a lot of blunt speaking at the moment about what has happened." I wonder whether Gordon appreciates Herr Steinbrück's "blunt speaking?"

Deluded Blinky Ed Balls has also hit back saying 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." Err... Balls, what international consensus? Also, 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? As ever Ed, you are talking absolute Balls!!!