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Sarkozy attacks Brown's VAT cut Sarkozy attacks Brown's VAT cut
(about 2 hours later)
French President Nicolas Sarkozy has criticised Prime Minister Gordon Brown's economic stimulus plan.French President Nicolas Sarkozy has criticised Prime Minister Gordon Brown's economic stimulus plan.
In a debate on French TV, Mr Sarkozy, whose handling of France's economy has prompted protests, said the UK's VAT cut had "absolutely not worked".In a debate on French TV, Mr Sarkozy, whose handling of France's economy has prompted protests, said the UK's VAT cut had "absolutely not worked".
"Britain is cutting taxes. That will bring them nothing. Consumption continues to decrease," he said."Britain is cutting taxes. That will bring them nothing. Consumption continues to decrease," he said.
Downing Street said the French had been in touch to stress the comments were not meant as a critique of UK policy.Downing Street said the French had been in touch to stress the comments were not meant as a critique of UK policy.
But the Conservatives said President Sarkozy was just the latest foreign leader to criticise Gordon Brown's policies.But the Conservatives said President Sarkozy was just the latest foreign leader to criticise Gordon Brown's policies.
'Not a critique'
Shadow chancellor George Osborne said: "We said at the time that Brown's flagship VAT cut would only make things worse and would be an expensive failure. That view is now echoed not just by British retailers, but by foreign governments, including France, Germany and Holland," he said.Shadow chancellor George Osborne said: "We said at the time that Brown's flagship VAT cut would only make things worse and would be an expensive failure. That view is now echoed not just by British retailers, but by foreign governments, including France, Germany and Holland," he said.
"Gordon Brown claims to have saved the world. It would appear that world leaders increasingly disagree.""Gordon Brown claims to have saved the world. It would appear that world leaders increasingly disagree."
'Irritation' In a 90 minute interview, President Sarkozy defended his plans to revive the French economy, a week after protests and strikes by a million French workers.
President Sarkozy made his remarks during a 90 minute interview in which he defended his plans to revive the French economy, a week after protests and strikes. I don't believe that the VAT cut hasn't worked Pat McFaddenBusiness minister
Gordon Brown claims to have saved the world. It would appear that world leaders increasingly disagree George OsborneConservatives
A million French workers downed tools to protest against what they said was an inadequate response to the global financial crisis, and urged the government to do more to protect jobs and wages.
He made his comments after being asked why France was investing in infrastructure projects not cutting taxes.He made his comments after being asked why France was investing in infrastructure projects not cutting taxes.
Asked about the remarks on Friday, the prime minister's spokesman said: "The Elysee [Palace] have been in contact this morning to assure us that these remarks were not meant as a critique of UK economic policy - which is nice."Asked about the remarks on Friday, the prime minister's spokesman said: "The Elysee [Palace] have been in contact this morning to assure us that these remarks were not meant as a critique of UK economic policy - which is nice."
But he stressed that the government had set out its case for a VAT cut and other countries had to decide what is appropriate for their economies. He said that the government had set out its case for a VAT cut and other countries had to decide what was appropriate for their economies.
A Downing Street spokesman later added: "It is important to remember the context in which he was making the comments, which as I understand it, was a domestic debate on television about the way forward for the French economy and French proposals for an economic stimulus."
'Breathtaking'
BBC political correspondent Carole Walker said there appeared to be some irritation at Downing Street about the comments. She added it was clear, in the run-up to the G20 summit, that President Sarkozy had a different view to how a fiscal boost should work, than Mr Brown.BBC political correspondent Carole Walker said there appeared to be some irritation at Downing Street about the comments. She added it was clear, in the run-up to the G20 summit, that President Sarkozy had a different view to how a fiscal boost should work, than Mr Brown.
Mr Brown's economic stimulus plans came under fire in December from Germany's finance minister Peer Steinbruck, who said Britain's response to the crisis had been "crass" and "breathtaking".Mr Brown's economic stimulus plans came under fire in December from Germany's finance minister Peer Steinbruck, who said Britain's response to the crisis had been "crass" and "breathtaking".
Downing Street stressed at the time that German chancellor Angela Merkel was sympathetic to the British approach and said the remarks were down to "internal German politics". The Conservatives say the criticisms undermine the government's claims that other countries were following the UK's lead over the economy.
But the Conservatives said the criticism undermined the government's claims that other countries were following the UK's lead over the economy. The Conservatives and Liberal Democrats have both criticised the year-long reduction in VAT from 17.5% to 15% - estimated to cost £12bn. The Tories say it has been an expensive failure, pointing to figures suggesting shopper numbers had fallen. The Lib Dems said it was a "seriously defective" way of getting money into the economy.
The Conservatives and Liberal Democrats have both criticised the VAT cut but the government says it is right for the economy and saves the average family about £20 a month. But Downing Street defended the VAT cut, saying recent reports suggested it had stopped sales falling as far as they would otherwise and could be expected to increase sales by 1.2% over 2009.
Business and Enterprise Minister Pat McFadden told BBC Radio 4's The World at One: "I don't believe that the VAT cut hasn't worked. This is something that is going to be in place for the rest of the year.
"I don't deny for a moment that times are tough in the economy but I think that governments do have to be active. Many governments around the world are taking a fiscal stimulus."