Politics stymies Germany on downturn - UK minister

LONDON, Dec 11 - Germany's ability to respond effectively to the global economic downturn is hampered by domestic politics, a British government minister and strong ally to Prime Minister Gordon Brown said on Thursday.

"They are arguing in Germany about the right way to go," schools minister Ed Balls told Sky TV. "Once the politics in Germany is resolved they will be acting with us too."

His comments came the same day European leaders were due to meet in Brussels to discuss ways to respond to the crisis. They were made in response to criticism by German Finance Minister Peer Steinbrueck who said Britain was adopting untested economic policies and could saddle a generation with debt.

"We will find Germany joining the consensus of countries around the world who know that action now for our economies is the right thing to do," Balls added.

Germany has come under fire for not doing enough to address the global economic downturn.

Government sources told Reuters that Brown's administration was not concerned about the risk of a potential rift with Germany, saying they were "relaxed" about Steinbrueck's comments.

"We have a good working relationship with (German Chancellor) Angela Merkel," a source at Brown's Downing Street office said.

"We are working closely with the German government. It is recognised that world opinion is almost universally in favour of the need for a fiscal stimulus."

Speculation of a rift increased this week after Merkel -- in charge of Europe's biggest economy -- was left out of a London summit on Monday involving Brown, French President Nicolas Sarkozy and European Commission chief Jose Manuel Barroso.

Those three firmly endorsed a 200 billion euro ($262.5 billion) stimulus proposal for the European Union. Barroso said it would be unreasonable to think about any plan without the active participation of Germany.

But Steinbrueck, on the Social Democrat side of Germany's coalition government, has said there will be no additional economic package before Easter. Conservative Merkel says she will review the situation in the new year.