British government responds to French criticsm of VAT cut policy
The British government Friday showed signs of irritation at France's criticism of Prime Minister Gordon's Brown's tax-cutting policies to boost the economy, dpa reported.
Remarks made on French TV by President Nicolas Sarkozy had been discussed between officials from Downing Street and the Elysee Palace in Paris Friday, a spokesman for Brown said.
He was referring to Sarkozy's comment in a TV debate Thursday evening that Britain's policy of introducing a temporary 2.5-per-cent cut in Value Added Tax (VAT) to help stimulate the economy had been a "mistake" and had "absolutely not worked."
"The Elysee 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," a Downing Street spokesman said.
He declined to divulge who initiated the contact between the two seats of government, but added: "It is important to remember the context in which he (Sarkozy) was making the comments...a domestic debate on television about the way forward for the French economy and French proposals for an economic stimulus."
The British government insists that the temporary cut in VAT to 15 per cent, introduced in December and due to last until the end of 2009, has already boosted demand and decreased inflationary pressures.
But Sarkozy, who has made investment rather than tax cuts his main tool in the anti-recession fight, said: "Britain is cutting taxes. That will bring them nothing. Consumption continues to decrease in Britain."
French commentators stressed Friday that Sarkozy's remarks were aimed primarily at a domestic audience, especially in view of demands from the Socialist Party for tax-cutting measures.
However, last week, Dutch Finance Minister Wouter Bos dismissed the tool of a VAT cut as "not a very wise thing to do," and late last year, German Finance Minister Peer Steinbrueck caused a row by attacking Brown's response to the downturn.
Brown has said he would like to achieve an internationally coordinated response to the global economic crisis at a summit of G20 nations to be hosted by him in London in April.