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| Version 0 | Version 1 |
|---|---|
| Germany 'out of step' on downturn | Germany 'out of step' on downturn |
| (about 3 hours later) | |
| Downing Street has hit back at an outspoken attack by Germany's finance minister's on the government's plans to combat the economic downturn. | Downing Street has hit back at an outspoken attack by Germany's finance minister's on the government's plans to combat the economic downturn. |
| Peer Steinbruck had criticised the UK's decision to cut VAT and raise the national debt to record levels. | Peer Steinbruck had criticised the UK's decision to cut VAT and raise the national debt to record levels. |
| He said Britain's switch from financial prudence to heavy borrowing was both "crass" and "breathtaking". | He said Britain's switch from financial prudence to heavy borrowing was both "crass" and "breathtaking". |
| But sources close to the government said Berlin was "out of step" with most nations on how to handle the crisis. | But sources close to the government said Berlin was "out of step" with most nations on how to handle the crisis. |
| Mr Steinbruck's comments, in an interview with Newsweek magazine, represented an unusual breach of standard diplomacy. | Mr Steinbruck's comments, in an interview with Newsweek magazine, represented an unusual breach of standard diplomacy. |
| He questioned the effectiveness of the decision to cut VAT from 17.5% to 15%. | 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. | "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." | "All this will do is raise Britain's debt to a level that will take a whole generation to work off." |
| 'Tossing around billions' | 'Tossing around billions' |
| Mr Steinbruck questioned why Britain was "tossing around billions" and closely following the high public spending model put forward by 20th Century economist John Maynard Keynes. | Mr Steinbruck questioned why Britain was "tossing around billions" and closely following the high public spending model put forward by 20th Century economist John Maynard Keynes. |
| "The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking," he said. | "The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking," he said. |
| Shadow chancellor George Osborne said the comments shattered Labour's charge that only the Conservatives oppose the VAT measures. | Shadow chancellor George Osborne said the comments shattered Labour's charge that only the Conservatives oppose the VAT measures. |
| BBC political correspondent Jo Coburn said sources close to Downing Street and the Treasury were unhappy about the comments. | BBC political correspondent Jo Coburn said sources close to Downing Street and the Treasury were unhappy about the comments. |
| But she said they dismissed them by saying that Germany "was in a minority position and out of step with most other countries on how to deal with the looming recession". | But she said they dismissed them by saying that Germany "was in a minority position and out of step with most other countries on how to deal with the looming recession". |
| Chancellor Alistair Darling announced in last month's pre-Budget report that the government would inject an extra £20bn into the UK economy in a bid to get it moving again. | Chancellor Alistair Darling announced in last month's pre-Budget report that the government would inject an extra £20bn into the UK economy in a bid to get it moving again. |
| Rescue package | Rescue package |
| At least £15bn of this total will come from increased government borrowing, which is expected to take the UK's total public borrowing to £118bn next year. | |
| While Mr Steinbruck has accused the UK of over-spending on the economic recovery, the German government has put 480bn euros (£370.4bn; $645bn) into a rescue package for its banks. | While Mr Steinbruck has accused the UK of over-spending on the economic recovery, the German government has put 480bn euros (£370.4bn; $645bn) into a rescue package for its banks. |
| Most other European governments have also increased public spending to try to ease the impact of the economic downturn. | Most other European governments have also increased public spending to try to ease the impact of the economic downturn. |
| France recently announced plans to spend 26bn euros, and the European Commission wants to spend 200bn euros across the European Union. | France recently announced plans to spend 26bn euros, and the European Commission wants to spend 200bn euros across the European Union. |
| A Treasury spokesman said: "There is a broad international consensus that a fiscal stimulus is the right thing for economies now." | A Treasury spokesman said: "There is a broad international consensus that a fiscal stimulus is the right thing for economies now." |