At a time of bleak economic news where the Sterling is nearly matching the value of the Euro, the pound reaching an extraordinary low today – European heads of state gather in Brussels. The atmosphere is tense.
At PMQs Gordon Brown had a Freudian slip, saying that the government “saved the world” instead of “saved the banks”. At least he is supposed to be the ‘saviour of Europe’. His suggested bail out plan was officially taken up as an economic recovery plan by the European Commission. It is supposed to be decided on for all the other European member states in the current European Council meeting in Brussels.
“It’s the best way to restore citizens’ confidence and counter fears of a long and deep recession”, Commission president Jose Manuel Barroso told the BBC in November this year.
However, some member states like Germany which alreadyhave implement national measures to save their economies oppose a joint approach.
The United Kingdom implemented a £ 12.5 bn VAT cut last month which was harshly criticised by Germany’s finance Minister Peer Steinbrueck in a Newsweek interview yesterday. Steinbrueck said that the UK measures were “crass” and “breathtaking” and also said that a great rescue plan “doesn’t exist!” He said the cut would only pull the UK into greater debt instead of helping consumers.
Germany has already spent around £ 370.4 bn on a bail out of its banks, far more than the EU bail out plan is expected to raise. It is therefore now cautious about spending even more.
Other issues expected to be discussed at the summit are the Irish “No-Vote” on the Lisbon Treaty and climate change policies.