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Sarkozy: I won’t repeat Gordon’s mistakes on VAT and the economy
Joe Murphy06.02.09
Nicolas Sarkozy infuriated ministers today by launching an attack on “Gordon Brown's mistakes”.
The French president criticised the Prime Minister's flagship economic recovery strategy on television, saying it was “flawed”.
He scorned the cut in VAT to 15 per cent as ineffective, saying: “Gordon Brown's decision to cut VAT has absolutely not worked. Cutting VAT by two points doesn't incite people to buy if they are scared about their future.
“If anything, consumption in Britain has gone down.”
Mr Sarkozy, who toured Britain last year with his wife Carla on a state visit, made the attack while unveiling his own plans to beat the financial crisis. During a 90-minute interview he said he would not be “repeating Gordon Brown's mistakes”.
The Sarkozy broadside left Downing Street officials seething with anger.
It was a blow to Mr Brown's repeated claims that his economic policy is part of a co-ordinated global recovery strategy shared by all world leaders.
British diplomats spoke to the Elysée Palace to demand clarification of Mr Sarkozy's remarks this morning.
The French attempted to smooth over the incident by simply denying their president had said anything that amounted to criticism, telling Downing Street that Mr Sarkozy had not intended an attack on British economic policy.
However, a Downing Street spokesman could not conceal the irritation caused at Number 10, saying: “The Elysée 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.”
The French denial was difficult to accept, given such comments by Mr Sarkozy as: “Britain is cutting taxes. That will bring them nothing. Consumption continues to decrease in Britain.”
Shadow chancellor George Osborne said Mr Brown's mistakes had been exposed by the French president, saying: “We said at the time his temporary 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.”
The issue is highly sensitive to the Prime Minister because cutting the tax from 17.5 per cent was widely criticised by business and retail leaders as ineffective, bureaucratic and wasteful.
Mr Osborne has said it was wrong to borrow the £12.5 billion cost and Christmas sales figures suggest the small price reduction made no difference to shoppers scenting better bargains in the sales.
Both Mr Sarkozy and the Germany leader Angela Merkel rejected the idea of a VAT cut within days of it being announced. Earlier this week, Dutch finance minister Wouter Bos said the cut was “not a very wise thing to do”, adding: “I don't believe it will contribute to a recovery of the economy.”
Reader views (22)
You have the wrong glasses on Val Daniels. UK borrowing went past 50% a while ago. It's just because Gordon is frightened to reveal the true figure
- Albert Hall, hove england
Hurrah for Gordon! The cost of a middle-size back coffee in Starbucks has fallen from £1.75 to just £1.70. Five pence off the price of a coffee is well worth a £12 billion hole in the nation's finances.
Caroline : there's no VAT on most food bought in supermarkets or on children's clothes so cutting VAR doesn't make any difference to the prices of those things. And the VAT on fuel is 5% and wasn't changed by this cut. Of course you'd have gotten a tenner off a plasma telly.
- Paul, London, England
It's the level of borrowing against their GDP that prevents the French and the Germans from doing the same as GB. The German borrowing is 53%,the French 50%,GB is only 40%. Similarly the VAT rates are different, 19% as opposed to 17.5%. You can only do what GB has done if you can afford to, France and Germany cannot. George Osborne is wrong as usual, the IFS said the VAT cut was the right thing to do and would be seen to be right as the benefits come through later in the year. Kenneth Clarke also said it was right, but changed his tune when he was welcomed back into the Shadow Cabinet. As for M&S and Next, they would say that wouldn't they, they are Tory donors.
- Val Daniels, Mijas Costa, Spain
Sarkozy should be in charge here.He would not allow Tax payers money to pay greedy Bankers their bonuses, which have not been earnt. I would like to know why we pay bonuses for failure?
- Stan White, leeds
It would be funny if it weren't so tragic. Two and a half million French people demonstrated on Janth. Mostly pensioners, 18,000 in my town because they can't live on their incomes of 600 euros a month any more. The cost of living has gone up and up and up. All low-paid workers are in financial difficulies: nothing left over after the direct debits have gone. Many are in debt, revolving credits! The handicapped and the unemployed cannot heat themselves or their children. There are suicides of single women who cannot afford to feed their children: misère, my Doctor told me. Defenestering. The press in France is terribly censored. Le Monde used to be the best newspaper in the world, but now there's nothing in it except photos of Sarkozy. Bad news. Give the people cake, said Marie Antoinette. But my friends in Bournemouth say there are lots of French people that have found work there, because there's none in France: factories closing, etc. And, prices of everything, including food, have gone down thanks to the cut in VAT! Time to go back to Blighty! CH
- Caroline, France
These comments betrays the Presdent's economic and financial illiteracy. Like the Tories, he thinks there are instant solutions to economic problems. These people do not realise that turning around an economy is like steering a massive liner-it takes sometime. It is too soon to say whether the VAT reductions are working or not. However, £5 a week is a welcome relief to thousands of families and pensioners on low incomes. Of course for the likes of Cameron and Osborne this is insignificant-just price of a coffee at Starbucks in Notting Hill !
- Neil, London
Agree with Marianne.
Why tie yourself to more than one incompetent?
Withdraw from the E.U. immediately
- Alan, Llandrindod Wells
Let's face it, each is pretty much as incompetent as the other.
- Marianne, SW France
if I was him I would take a look at the unemployment rate in France (which is even worse than stated if you add up the hundreds of thousand that are now working 4 days a week (+ those that have been on 'voluntary holiday' for 2 months now...
He also forgets to mention that 6 months ago he was ailing the UK as being an economic model....and wanted to reform france to do the same....! If i was British i'd just ignore what he says.. he's totally incompetent!
- Thierry, London
There are many very intelligent people who have had businesses go bankrupt, and while they were running their business before they went bump they were convinced that they were doing the right thing, the Prime Minister has this problem in that he is convinced that his policies are right. The British economy is too important to be run by one political party, Gordon Brown should put together 9 member team of 3 people from each of the Labour,Conservative and Liberal Party and implement the majority decision,that way he gets the best of the policies without seeming to change direction and at least if the new policies dont work he wont get the blame. The present problem is too global for what we do to make much difference, but we can make things slightly better.
- Jim Allen, Wigan Lancs.
when I look at how he's running France since his election 18 months ago I think he isn't exactly the right man to judge or even to give lessons to his neighbours:
France is devastated by ever growing poverty, ever growing closures of plants he has promised to save (Arcelor-Mittal in Gandranges,Lorraine, for example that will close in few weeks putting on the pavement dozens of workers without "reclassement"'s possibilities), ever fast growing number of jobless peoples, growing ever lower incomes with ever more hours to works and if you don't agree you can leave the place, ever growing cut in administration and services jobs ( see what happens in French hospitals, education, police etc...)ever growing number of peoples who have to live with an average income of 1'000 euros.
but for him everything is ok: last year he decided to grow his personnal income as president to more than 100%.
well, he is beautiful "le candidat du pouvoir d'achat" isn't it.
I'm very sad for all these people who have believed in him, voted for him and have been betrayed. I'm also sad because is it my country. but I'm happy too because in several years he willleave the place if there isn't a revolution before to throw him out of his throne.
- Anne-Laure, geneva switzerland
Yeah- right on Sarko! He also said;
'The English abandoned their industries 25 years ago, and now they are regretting it. Meanwhile the City and their financial sector looked towards the United States, so now London is paying the price.'
So thanks a lot Maggie, and your wrecking of society and our industries, it's down to you we're "paying the price". At least the French own large tracxts of what IS left of our industies and utilities. So they'll be OK.
I know- maybe we can send her daughter over for some diplomacy, and her son can charge for consultancy fees.
- Fresh, London
Sarko also said he might not run for President in 2012. I hear he says he wants more a of challenge. Like being Prime Minister of Britain.
- John Problem, Hackney Wick, London, UK
Sarkozy was right!!! The vat cut has done nothing, except put up the price of fuel for VAT regestered businesses.
- Jeremy E, London
Sarkozy has an unfortunate habit of blurting out the truth.It could be a case of British job for Frenchman....the present Scottish incumbent is "unfit for purpose"
- M Tanneau, audierne france
The real problem is that Mr Brown actually believes that that "..his economic policy is part of a co-ordinated global recovery strategy shared by all world leaders." In reality it's nothing of the sort, and just goes to show that Brown hasn't got a clue what he's doing. He also knows that if he CAN'T convince us all that this is "a Global crisis that needs a Global solution" then more of our problems (and our inability to respond effectively in the UK) must be down to LOCAL politicians - errr, that means you Gordon!!!
- Malcolm, London
Heavens above Melvyn, move on, the world has and by the way I find your comment very offensive to the vast majority of French people who either fought hard for their country and their salvation or paid a heavy price for it. You are a disgrace.
- Daniel, London
The only way that any French leader throughout history boosts his waning home popularity, is by attacking the very country that dug them out of a hole twice in resent history.
It's called a cheap shot on a rugby pitch and the French are very good at this kind of cynical behaviour.
Our partners in Europe who we give 20 billion a year to?? Don't make me laugh.
- Frank, Home Counties, England.
It's useful in this context to remember that you have to ask the EU permission to lower VAT...many have commented that it would have been better to remove the VAT on domestic fuel. But of course the EU has barred the UK from doing this. When Labour first produced its draft manifesto in 97, the party stated that it wanted to "remove" the "Tory-imposed" VAT on domestic fuel. Just as in the Jobs for British Workers fiasco, the politicians had little idea of their powers of what they are allowed and not allowed to do. The European Commission quietly pointed out that no UK government is permitted to do this, so the promise quietly changed to ""we will lower the VAT on domestic fuel to the lowest permissable level". And that is where it is, and has remained ever since. Of course no mention of who "permits" or refuses permission. So even a party which might now place in its manifesto a commitment to scrapping VAT on domestic fuel, and achieves a unanimous vote in parliament for scrapping it, is barred by law from doing it. Remind me, why do we have a parliament any longer?
- Damian Hockney, London, UK
The French would love a vat cut especially the restaurant and bar owners: There is a lot of muttering amongst my French friends re the cost of being in the EC and many of them think the whole thing is a massive financial burden which they can ill afford
- Sheila, london uk
Surely Mr Sarkozy is only saying what many of us feel. The VAT wheeze was widely neither welcomed nor seen as effective. The "rage" in Downing Street probably stems from our PM's inability to accept that someone might, just might, know better than him. It wasn't Sarkozy or Merkel who boasted, unjustifiably, about leading the world and if such absurd claims lead to comeuppance, so what.
- James Elliott, Eastbourne UK
At least we dont keep a white flag under our beds in case a german comes knocking in the night!
- Melvyn Windebank, Canvey Island, Essex
