Peer Steinbrück, Social Democratic finance minister, hardly pulls his punches in a Newsweek interview:
“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. The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking. When I ask about the origins of the 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?”
UPDATE: A Downing St spokesperson just invoked some of Mrs Merton’s homespun wisdom to laugh off the remarks. “As Mrs Merton might have said, I’m not going to speculate on what would have provoked the German finance minister to make these comments in an election year.”
Here’s a clip of the real thing.
[youtube]http://www.youtube.com/watch?v=Lj-9lSEBBm0[/youtube]
Jim Pickard
Kiran Stacey