As surprising as it is to hear a leading finance minister attack the policies of a counterpart, Peer Steinbruck is not the first to raise concerns that the 2.5 per cent cut in VAT may not be the solution to sliding consumer spending.

Some economists have already questioned if the marginal reduction in VAT, from 17.5 per cent to 15 per cent, will make any difference to spending patterns, pointing out that hard-pressed consumers may simply use the extra cash left over after buying goods to boost their savings, rather than heading out to buy more goods.

And there are some stores, as Mr Steinbruck points out, that will simply not pass on the full cut to consumers.

Mr Steinbruck is also correct about the mammoth bill totting up as a result of the move - the Treasury calculates that the temporary VAT reduction will cost £12.4 billion.

He also hits the nail on the head about the UK Government's apparent sudden adoption of "keynesianism" - the theory that countries should spend their way out of a downturn.

The Government believes its actions as necessary, but Mr Steinbruck is struggling to see how a government that preached about fiscal prudence has suspended its own fiscal rules and borrowing left, right and centre, calling it "breathtaking."

Only time will tell if shoppers will embrace the Government's move, and start splashing the cash. But if they don't, the Government may struggle to justify the multi-billion pound hole it made in the coffers as a result of the VAT cut.

Explore Economics

• Pre-Budget Report 2008

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive