The earlier finger-pointing underscored the fault lines in Europe between those such as Mr Brown who believe in spending their way out of the downturn, and others such as Mr Steinbrück who are resisting calls to increase borrowing. The attack by Mr Steinbrück - from the left-wing Social Democratic Party, which is in coalition with Ms Merkel's Christian Democrats (CDU) - delighted British Conservatives. In an interview in Newsweek magazine he ridiculed the British Government's recovery plan, in particular the cut in VAT from 17.5 per cent to 15 per cent.

"We have no idea how much of that stores will pass on to customers. Are you really going to buy a DVD player because it now costs £39.10 instead of £39.90?" Mr Steinbrück said.

"All this will do is raise Britain's debt to a level that will take a whole generation to work off. The same people who would never touch deficit spending are now tossing around billions. The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking."