Germany is leading the fightback against Gordon Brown’s drive to stimulate the world. Angela Merkel is distinctly unimpressed by the case for a tax cuts, in spite of sitting on a big budget surplus. In a speech to the German parliament she endorsed Brown’s diagnosis of the problem, but dismissed his proposed solution.
“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.”
If you thought that was undiplomatic, take a look at the views of her confidant and adviser. Steffen Kampeter, the budget expert in Ms Merkel’s Christian Democratic Union, said:
“I see the danger of creating a new bubble. Massive interest rate cuts and massive borrowing may bring about new problems.”
“How good is a policy package if it has to be changed every other week? How good is it for confidence? The latest British decisions on VAT [value added tax] and income tax, for instance, are inconsistent. Better to wait a bit longer and put forward more durable solutions.”
Merkel said leaders must resist the temptation to “overcome the crisis” and instead “build a bridge so that we at least can start recovering in 2010″. Is this what David Cameron would be saying if he was prime minister now?
Jim Pickard
Kiran Stacey
