Handbags, not a war

I had two surprises on my visit to England last weekend.

The first was to discover that the value of Britain's currency has fallen below that of the euro. Not at the official exchange rate — that is around €1.11 to the pound — but certainly at some of Britain's airports and on London's Oxford Street. More here.

The pound has fallen so far this year that Britain is now cheap for visitors from the Eurozone. This is good news for the tourist industry. The lower exchange rate also makes Britain's exports more competitive. But it is still a shock for Brits to find that their beloved pound is worth less than the hated euro.

The second surprise was to discover that Britain and Germany are not at war with each other.

You could be forgiven for thinking they were, if you have been following media reports of the attack by Peer Steinbrück, Germany's abrasive finance minister, on the policies of Gordon Brown, Britain's abrasive prime minister.

In an interview with Newsweek magazine, Steinbrück criticized Britain's decision to cut taxes as a way of boosting consumer spending and fighting the recession:

• "Our British friends are now cutting their value-added tax. We have no idea how much of that stores will pass on to their customers. Are you really going to buy a DVD player because it now costs £39.10 instead of £39.90? All this will do is raise Britain's debt to a level that will take a whole generation to work off... When I ask about the origins of the crisis, economists I respect tell me it is the credit-financed growth of recent years and decades. Isn't this the same mistake everyone is suddenly making again, under all the public pressure?"

Ouch, yes. But hardly a declaration of war. Interestingly, Britain's Conservatives, usually suspicious of all things German and European, have been happy to use Steinbrück in their own war against Gordon Brown.

Brown himself refused to retaliate, saying, "I do not really want to get involved in what is clearly internal German politics here".

Not much of a war, that. More like handbags if you ask me.