German Finance Minister Peer Steinbrück has left ministers in London aghast with his undiplomatically forthright comments about the British stimulus package. Many British newspaper editors, however, are citing German prudence with approval.
Speaking to Newsweek, Steinbrück described Gordon Brown’s bid to borrow his way out of recession as ‘crass Keynesianism’. Mockingly, he pointed out that the cut in value added tax from 17.5 to 15 percent would leave a DVD player 80 pence cheaper – hardly enough to entice people to hit the malls.
Steinbrück’s comments were a blow for Brown and his chancellor (finance minister) Alistair Darling, providing as they did a pointed reminder of how much better prepared Germany is than Britain for the tough times ahead. Germany’s budget surplus contrasts with Britain’s large deficit; the high levels of personal debt in the UK contrast with low debt and high levels of savings in Germany.
Needless to say, today’s UK papers have been poring over the entrails of the Newsweek interview – before picking them up and slinging them at the British government.
The tabloid Sun newspaper, never a great friend of understatement, was quick to paraphrase the finance minister; ‘Germans: Gord is a total failure’, it shrieked.
Over at the centrist Independent, Jeremy Warner wondered whether the Steinbrück might like to take over his column: ‘In two words, he’s managed to articulate what many of us have been struggling to say ever since the [British] Government announced a £20bn VAT giveaway in the pre-Budget report – namely that trying to spend your way out of recession after years of preaching fiscal rectitude is not only a U-turn of quite astonishing proportions, but also that in the manner proposed it probably won’t do any good either.’
The right-wing populist Daily Mail agreed. It found itself in the unusual position of summoning the ghost of uptight sitcom hotelier Basil Fawlty to side with a German Social Democrat. In an article headlined ‘Don’t Mention the Fiscal Stimulus’, the paper admitted it wouldn’t usually take advice from Steinbrück, a man ‘known to frown on Anglo-Saxon free markets who earlier this year starred in a rap video wearing an Afro wig.’ But, it said, this time he was right:
All around the world, governments are rushing to spend and borrow their way out of the recession, despite no country in history ever managing to do this.
The Financial Times cautioned that the German finance minister may have spoken too soon. Reminding readers that Steinbrück is ‘not known for keeping his thoughts to himself,’ it describes his anger with Britain as ‘understandable, but misplaced’. Understandable, because Steinbrück has spent the past few years diligently bringing the German public finances back into the black. Misplaced because the economic downturn elsewhere is having a massive impact on German exporters. The time will come for Germany to lecture the rest of Europe on prudence, the paper says. For now, though, ‘Germany must start spending. The consequences otherwise will be dire.’
Other columnists were warning that it would be more correct to apply the ‘crass’ label to German policy. The economics editor of the Daily Telegraph, Edmund Conway, argued that German ‘inaction and restraint’ could have much worse consequences than the hyperactivity of the British.
During the 1930s it was the resistance of the world’s surplus nations to large-scale rescue packages that caused the economic misery to spread so virulently around the world.
Right or wrong, Steinbrück’s comments have done little to improve German-British relations. Still less have they sold German economic prudence to British ministers and their supporters in the press. But they have certainly given ammunition to Gordon Brown’s detractors.
You are currently browsing the The Local’s Blog blog archives for December, 2008.