Friction has been slowly building up between France and the UK over the past few weeks and comments by the French President, Nicolas Sarkozy, sparked new conflicts between the pair this week.
Nicolas Sarkozy has been accusing others, Gordon Brown included, of being rash and that their decisions, the one regarding cutting tax in particular, of being extremely ineffective.
The tax cut by Gordon Brown was a drastic measure, and it certainly would be a case of trial and error. What we can say so far is we have not seen substantial improvements in the economy based on the cut, but the tax cut and a combination of other activities within the rescue plan, could turn the economy around.
Nicolas Sarkozy has an incredible way of expressing his feelings towards other nation’s approaches at fixing the economy, something that has got him into difficulty in the past with the Czech Republic. Gordon Brown and Nicolas Sarkozy will be able to battle the subject out at the next summit, which is to be held in Berlin within 14 days.
As UK government officials have suggested, the UK cut in VAT can’t be deemed effective or ineffective as of yet, its just to soon to call. The VAT cut will run throughout the year, and if it hasn’t work, then the government will need to take a slightly different approach.