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Sunday 6 July 2008

Run on Labour (Wall Street Journal Europe)

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I have a piece in today's Wall Street Journal Europe on the politics of the Northern Rock fiasco. Here's an extract:

We still await the first polls on the subject, but it is a near-certainty that the government will be held, at least in part, responsible. The TV news programs are full of economic correspondents pointing out that Britain's economic boom is built on an unsustainable credit bubble, and that this crisis might be merely the first. The Conservative leader, David Cameron, has said that: "This government has presided over a huge expansion of public and private debt without showing awareness of the risks involved. Under Labour our economic growth has been built on a mountain of debt." If that message sinks in, then Labour's prize asset -- Gordon Brown's reputation for economic competence -- will be blown apart.

That reputation has been the single biggest obstacle to any Conservative revival. If it is destroyed and the Conservatives are able to persuade voters that they are -- as was axiomatic before Black Wednesday -- the people to trust with the economy, then the entire shape of British politics will have changed.

 The likelihood of that happening is increased by the figure of the current Chancellor of the Exchequer. There was never a more dominant chancellor than Gordon Brown. When Tony Blair was prime minister, he was often described as the chairman of the board, with Mr. Brown as his CEO. It was a longstanding political joke that when Gordon Brown became prime minister, he might as well be his own Chancellor, since only political eunuchs would be in contention for the actual job. And the appointment of Alistair Darling proved that the joke was for real.

...That is precisely why he was chosen by Gordon Brown -- to be a cipher who would have no public profile and, more importantly, to be an empty vessel who would not use the chancellorship to exercise any of the political power which is usually attendant with the post.

That tactic is now rebounding on Mr. Brown. At the very time when the U.K.needs a chancellor to be reassuring and to exude competence, Mr. Darling is a man clearly out of his depth -- stuttering, misremembering critical statistics and incapable of going beyond petty political jibes. He points out in a series of interviews that Mr. Cameron was a junior official at the Treasury at the time the Conservatives presided over the collapse of Britain's ERM membership -- as if that was in any way relevant to the current crisis. His reassurances count for nothing, and exacerbate the feeling that this is a crisis not just for Northern Rock and banking but also for the government.

 

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