Analysis: VAT and Cuts Spell Trouble for Clegg
THE TIMES: Ministers from both sides of the coalition were quick to talk up the Lib Dem Budget wins, including the £1,000 increase in the starting rate of income tax and the £150 one-off payment for poor families.

But the Lib Dems could be forgiven for a tinge of self loathing every time this is described as a “progressive” budget, as they weigh the concessions made to them against the package of horrors they must now defend.

The pictures of Nick Clegg standing in front of the anti-Tory “VAT bombshell” posters last night were gruesome enough. The Treasury graphs showing the increased burden felt by the poorest in society are even worse.

But the real challenge for the Deputy Prime Minister, and Danny Alexander, the hastily appointed Chief Secretary to the Treasury, is that a sizeable number of Lib Dems disagree with the single biggest decision underpinning yesterday’s statement - the scale and speed of the cuts.

George Osborne revealed yesterday he wants to extinguish the structural deficit and be in surplus by the end of the Parliament with a combination of £8billion tax rises, £32billion spending cuts and £11billion welfare cuts by 2014.

The Chancellor called this “unavoidable” action needed to calm the market. But Lib Dems - and some in the markets - dispute this. The markets worry the scale of the action make tip Britain back into recession. Lib Dems point out many other countries maintain their AAA rating without paying off “every last penny” of the structural debt - money which could go to help the most vulnerable in society. Read on and comment >>> Analysis, Sam Coates, Chief Political Correspondent | Wednesday, June 2010

French President Nicolas Sarkozy Accuses Gordon Brown of Ruining British Economy
THE TELEGRAPH: Nicolas Sarkozy, the French President, has accused Gordon Brown of ruining Britain's economy and vowed not to repeat his mistakes in a frank interview which has sparked a cross-channel diplomatic row.



Mr Sarkozy, who is under pressure over his own handling of the downturn, made his remarks during a live 90-minute grilling screened on three television channels when asked whether he was considering economic stimulus measures similar to Mr Brown's VAT reduction.

In comments said to have caused anger in Downing Street, he replied: "The British chose a recovery plan by boosting consumer spending, notably by cutting VAT by two per cent. It is plain to see that it has brought absolutely no progress.

"When the English decided to cut VAT by two per cent, a certain number of politicians rushed to tell me that I should do the same. Since then, not only has consumption in England not gone up, it continues to go down.

"The reason is simple: because it's in people's heads. If the consumer no longer consumes, he won't change just because we add or subtract one VAT point, it's because he's scared for his future, he's scared for his job and says to himself: 'I must save, because bad times are coming'.

"In France, we chose investment because when we put France into debt by taking money to invest, in return we have assets, infrastructure. When you put your country into debt to pay for operating costs, you have nothing in return for your debt and you ruin the country.

"If the English did that it's because they don't have any industry left. Gordon Brown cannot do what I am doing with carmakers [giving them up to 6 billion euros]... in construction and other industries, because they haven't got any left." >>> By Rosa Prince, Political Correspondent | Friday, February 6, 2009

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