German criticism of UK policy doesn't add up

Peer Steinbrück, the Social Democratic finance minister speaking with Newsweek's in Berlin, was critical of UK economic policy.

“The speed at which proposals are put together under pressure that don't even pass an economic test is breathtaking and depressing. Our British friends are now cutting their value-added tax.  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 switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking”.

Actually, Peer, the revised price for the DVD with 15% VAT would be £39.05, the Treasury revenue loss is around £12 billion assuming no price curve effect and yes we are all crass Keynesians now, well for the moment.

And as for German policy, Steinbruck suggests “It's the yearning for the Great Rescue Plan. It doesn't exist. It doesn't exist!” And his views on Sterling are explicit in the graphic and in the Times profile.

Newsweek article   The Times Profile