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Europe

British press sceptical of stimulus plan

Text by AFP

Latest update : 2008-11-25

After the announcement by British Chancellor Alistair Darling of a cut in VAT as well as a rise in income tax for the highest earners, most of the British press remained sceptical about this "gamble".

Only time will tell if the British government's 20-billion-pound stimulus plan will stave off deep recession, but the action has set up the battle lines of the next election, newspapers here said Tuesday.

Finance minister Alistair Darling said Monday he would cut sales tax and help small businesses and pensioners, funding the plan -- worth 23 billion euros, or 30 billion dollars -- through borrowing and, later, tax rises.

Newspapers were cautious about whether it would boost the ailing economy, with most dismissing the main measure -- a temporary cut in sales tax from 17.5 to 15 percent -- as ineffective when retailers were already slashing prices.

But they described the plan as a pivotal moment, when Prime Minister Gordon Brown's ruling Labour party returned to its tax-and-spend roots, and the main opposition Conservatives set out their stall as champions of sound finance.

The Tories warned Darling had "placed a huge unexploded tax bombshell timed to go off under the future economic recovery", and many newspapers agreed that ratcheting up borrowing to 118 billion pounds in 2009-10 was a massive gamble.

The Financial Times said ministers had shown "extraordinary optimism" in predicting that the economy would begin to recover in 2010.

"The government talked yesterday of extraordinary measures for extraordinary times. Sadly, the most extraordinary aspect was the scale of the borrowing," the business daily said.

"The route back to financial sustainability was unconvincing -- both as individual measures and taken as a whole."

The Daily Express warned the middle-classes would suffer "as Labour's 'giveaway' mini-budget turned out to be the biggest tax raid in living memory".

"Darling spends now -- WE all pay later," added the right-wing Daily Mail, noting plans to increase social security payments from 2011, as well as the new top 45 pence tax rate for those earning more than 150,000 pounds a year.

Taxing the rich to pay for the spending spree was an "unashamed appeal to the politics of envy", it said.

The Times said that in ending a decade-old commitment not to raise the top tax rate, Darling's "Robin Hood-style budget" had effectively declared the end of ex-prime minister Tony Blair's business-friendly New Labour project.

"For a little more than a decade Britain's centre-left party turned its back on past economic folly... It became not just the party of social justice, but also the unabashed champion of economic opportunity and individual aspiration," the newspaper said.

"But when faced with difficult choices in a serious crisis it has abandoned its new dogmas for old certainties."

The left-wing Guardian welcomed the new political landscape, saying the choice at the next election -- which must take place by 2010 -- would be clear.

"Following in (US president-elect Barack) Obama's footsteps, it is suddenly safe to tax the rich and spend to protect jobs... Yesterday that faith allowed Labour to shed its disguise and follow its nature in a 20-billion-pound shower of spending," wrote one commentator.

"Yesterday saw the Conservatives stripped of their sheep's clothing too... merrily defending the aspirations of the wealthy. Now we can see both parties naked as nature intended, and at last comfortable in their own skins."

Date created : 2008-11-25

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