Monday, 15 December, 2008

Former British Prime Minister John Major on Sunday criticized the government's decision to cut tax on goods and services and increase borrowing to fund a fiscal stimulus, in an interview with the BBC.

Britain is teetering on the brink of its first recession in 15 years, which Prime Minister Gordon Brown has attributed to an international financial crisis fuelled by bad credit loans in the United States, but Major challenged that view.

"In fact, the domestic recession is entirely as a result of domestic policy," he told the BBC.

"If a burglar has ransacked your house, you don't normally invite him back to fix the security locks," he said, a reference to Brown having been finance minister for a decade from 1997.

Opponents of Brown have criticized his role in causing the downturn, saying he could have done more as finance minister, and now prime minister, to prevent or lessen its impact.

In a bid to combat the recession, Brown's government last month unveiled a major economic stimulus package worth 20 billion pounds (23 billion euros, 30 billion dollars), by borrowing more and raising income tax on the wealthy from 2011.

"The concept that Gordon Brown - who has been chancellor for 10 years and prime minister for one and presided over this train wreck - is the person to put right what he has got wrong strikes me as being ironic, to say the least," Major said.

He continued: "It's very easy to give an impression of action, the question is, is the action wise?"

"Now, I don't think most of the government's actions are wise," he said. He did acknowledge however that Brown had been right to recapitalize several of Britain's ailing banks.

Of the decision to cut value added tax (VAT) on goods and services to 15 percent from 17.5 percent, Major said the government "might as well have burnt the money and thrown it away. Frankly, I don't think it'll do anything that is credible at all."

He feared "an avalanche of job losses in the first three or four months of next year," he added.

Britain's economy shrank 0.5 percent in the three months to September, official data showed last month, the first quarterly contraction since 1992 and the biggest drop since 1990.

Source: http://www.channelnewsasia.com/