The International Monetary Fund's chief economist has dismissed Gordon Brown's £12.5bn VAT cut as 'not a good idea', and has warned European governments face depression if their stimulus packages fail to get the desired result. Chief economist Olivier Blanchard told Le Monde: 'Temporarily cutting VAT, a measure that was adopted in Great Britain, does not seem to me to be a good idea ... 2% less is not perceived by consumers as a real incentive to spend. 'The coming months are going to be very bad. It's imperative to strangle this loss of confidence, to revitalise economies and, if necessary, replace private demand if one wants to prevent the recession transmuting into a Great Depression.' According to The Guardian, Blanchard said the IMF was sticking to its 2% target of global gross domestic product for the fiscal stimulus needed, but warned that it may need more money. He said that boosting the economy would be better achieved by increasing public spending than reducing tax yields. 'Building bridges or rebuilding schools should have more impact on demand than tax cuts that households would be tempted to put by for a rainy day,' Blanchard added. The eurozone's two biggest economies, Germany and France, are launching new fiscal stimulus packages in the New Year, focusing on building new roads and schools.