German finance minister saves the world!

Gordon Brown may think he has saved the world. He may think he has saved the banks. But he hasn't saved the UK economy. Not according to the German finance minister, Peer Steinbruck. He has described Gordon Brown's recovery plans as "breathtaking" and "crass". And to a great extent he has a point. He questioned the effectiveness of the decision to cut VAT from 17.5% to 15%. "Are you really going to buy a DVD player because it now costs £39.10 instead of £39.90?" he said. "All this will do is raise Britain's debt to a level that will take a whole generation to work off." Apparently, the 2.5% cut in VAT will cost the UK £12 billion in one year. OK it is a "temporary" move, but surely that money could be well spent elsewhere. After all, it will be money we actually have, not plucked from his money trees that he planted in No.11 Downing Street.

Brown is upset with the minister. I can't think why! It's all his own doing. He failed to see the knock-on effect of the sub-prime fiasco, he dithered over Northern Rock (now into knockdown house auctions!), he waffled about saving the banks and he waffled about the economy as a whole.

He claims to be doing everything whilst the Tories do nothing. The trouble is he is only window-dressing. Like Woolworths, the windows tell one story, but inside it's all getting a bit messy.

Posted in: bail-out,banks,credit crunch,economy,Gordon Brown