Page last updated at 11:06 GMT, Friday, 12 December 2008

UK says Merkel backs fiscal boost

Gordon Brown and Angela Merkel
Gordon Brown and Chancellor Merkel are at an EU summit on the economy

The UK government has been defending its plans to boost the economy after attacks by two German politicians.

Foreign Secretary David Miliband said that there was strong pan-European commitment to a fiscal stimulus plan.

And he added that German Chancellor Angela Merkel was "fully engaged" with the European economic debate.

European leaders are meeting at a summit in Brussels to try and agree an economic stimulus plan to revive Europe's flagging economies.

Speaking on BBC Radio 4's Today programme, Mr Miliband said:


"The important point is that from the leadership of Germany, from the Chancellor of Germany, from the Prime Minister of Britain, from 25 other European leaders, you've got a widespread recognition that whatever the national differences this is a time for fiscal stimulus.

"It's a time for action by government and it's a time for intervention."

He added that internal politics were behind the criticism of UK policy by some German politicians.

German attacks

On Thursday, one of Germany's key politicians broke with diplomatic convention and criticised the UK government's response to the economic downturn.

Steffen Kampeter, of Chancellor Angela Merkel's CDU party, said the UK government's 20bn fiscal stimulus plan which would raise UK public debt "were a failure of Labour policy".

Stimulus plans
UK: 20bn (22.4bn euros), amounts to 1.7% of GDP
Germany: 31bn euros, 1.3% of GDP
GDP per capita (2007)
UK: $44,696
Germany: $40,078
Public debt
UK: 43% of GDP
Germany: 64% of GDP
Central bank interest rates
UK: 2%
Germany: 2.5%

He also denied that German finance minister Peer Steinbruck's earlier criticism of "crass" UK policies reflected internal German politics.

Mr Kampeter speaks on economic matters for the right-wing CDU, while Mr Steinbruck is from the Social Democrat Party. Both parties are part of the coalition government.

Mr Kampeter said: "Peer Steinbruck's comments have nothing whatsoever to do with internal German politics, as Prime Minister Brown has suggested.

"In questioning the British government's approach, Peer Steinbruck is exactly expressing the views of the German Grand Coalition.

"After years of lecturing us on how we need to share in the gains of uncontrolled financial markets, the Labour politicians can't now expect us to share in its losses.

"The tremendous amount of debt being offered by Britain shows a complete failure of Labour policy."

'Crass Keynesianism'

In a magazine interview, Mr Steinbruck had questioned Britain's decision to cut VAT and raise the national debt to record levels by following the high public spending model of economist John Maynard Keynes.

"The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking," he said.

He later sought to play down his comments, saying: "There is no question of criticising our British friends. Nothing is further from our minds."

Mr Brown had responded to the article by saying the German government had just announced a fiscal expansion so it could invest in public works.

He said: "I do not really want to get involved in what is clearly internal German politics here, because they have a coalition in Germany with different political parties."

The prime minister's official spokesman added: "Clearly there is a debate taking place in Germany about the nature of any additional fiscal stimulus measures.

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