Gordon Brown today launches an extraordinary attack on the leaders of America, France and Germany, accusing them of being "wrong" on the big economic decisions and failing to heed his warnings over the EU debt crisis.
The former British prime minister breaks his silence to claim wrong-headed EU leaders, including German Chancellor Angela Merkel and French President Nicolas Sarkozy, had "thrown away" another chance of economic recovery. They ignored his warnings about their banks' debt levels and are exacerbating the financial crisis which, in turn, risks condemning millions of people to a decade of joblessness.
In an article for The Independent on Sunday, Mr Brown claims Europe has wrongly presented the crisis as "one-dimensional" and, in doing so, has simply demanded "even more austerity". A summit last month to secure a bailout for Greece came to the "wrong conclusions" after three years of the "wrong analysis" of the scale of the problem.
And he claims the US refusal to sanction a new economic stimulus, raise taxes or cut entitlements is "choking off yet another potential engine of world growth". In a major blow for the US, the agency Standard & Poor's downgraded its rating by one notch to AA+, fuelling fears of more turmoil in markets around the world next week.
Mr Brown's remarkable intervention will reinforce comparisons between the flurry of activity surrounding his efforts to rescue the global economy in 2008, with the apparent reluctance of European leaders and finance ministers to curtail their holidays to deal with the crisis.
In a demolition of the political response to the latest global economic meltdown, Mr Brown warns: "Economic necessity was sacrificed to what was politically expedient." Dithering means "the next crisis gets ever closer and threatens even more danger", Mr Brown writes, before setting out his "global plan" for fixing the crisis which, if ignored, he warns will trigger "the most punishing of future outcomes".
Mr Brown claims the "lethal combination" of a fiscal crisis, a banking crisis and low growth "threatens a tragic roll call ... of millions of European citizens unnecessarily condemned to unemployment and a wasted decade".
The growing political row follows a terrible week for the stock markets, which suffered their worst falls since 2008. The FTSE 100 index plunged 10 per cent, the Nikkei fell by more than 5 per cent and the S&P 500 index was down by 7 per cent, prompted by worries that Europe's politicians have failed to solve the eurozone crisis and by brinkmanship in the US over the deficit deal.
David Cameron, on holiday in Tuscany, last night spoke by telephone to Mr Sarkozy, who holds the presidency of the G7 and is under pressure to call an emergency summit. But in a withering attack, Mr Brown warns: "No number of weekend phone calls can solve what is a financial, macroeconomic and fiscal crisis rolled into one, now needs a radical restructuring of both Europe's banks and the euro, and will almost certainly require G2O and IMF intervention."
Vince Cable, the Liberal Democrat Business Secretary, yesterday urged calm, repeating the government's line that Britain is "in a fairly good position" because the markets have confidence in the deficit-reduction plans. And in a move likely to anger George Osborne, the Chancellor, Mr Cable threw his weight behind China's call for a secured global reserve currency in response to the US downgrading.
China, the biggest foreign holder of US government debt, told the country to "come to terms with the painful fact that the good old days, when it could just borrow its way out of messes of its own making, are finally gone".
The decision by Standard & Poor's to strip the US government of its gold-plated AAA credit rating is the first time in 70 years that US debt has been judged anything other than risk-free. The debacle over raising the legal debt ceiling and the disappointing deficit-reduction plan adopted last week proved the final straw for S&P. "The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable," the rating agency said.
The White House called S&P's maths "flawed" and complained that an early draft of the downgrade included erroneous assumptions on future government spending. S&P said the differences were insignificant.
Moody's and Fitch, the other two major credit rating companies, affirmed the AAA grade on US debt last week, albeit with a negative outlook. In Europe, the markets expect the European Central Bank to intervene to buy up Italian and Spanish bonds to indicate confidence after the cost of borrowing for those two countries soared last week to euro-era highs of more than 6 per cent.
The crisis in numbers
This week’s loss in value of the UK’s top 100 companies
Wiped off the value of stock markets worldwide over the past 10 days
Invested by pension savings in UK shares and £108bn is invested in stocks and shares and shares linked ISAs by UK customers
Italy’s debt as a per cent of its GDP
Total of Italy and Spain’s debts
RBS reported half-year loss after taking provision on Greek debt
Number of points the FTSE 100 dropped on Friday, the biggest drop since the financial crisis of three years ago when it lost 1,000 points in a week