Sarkozy: I won’t repeat Gordon’s mistakes on VAT and the economy

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."

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