Brown’s reputation for economic competence has gone. The Tories should seize the chance

26 January 2008

Fraser Nelson reviews the week in politics

This is why the turmoil to which Mr Brown returned on Tuesday morning could be as damaging to him as the problems which greeted the tanned Jim Callaghan on his return from the Guadeloupe arms summit in 1979. Mr Brown did not ask ‘Crisis? What crisis?’ (That was the headline: Callaghan’s words were actually ‘I don’t think other people in the world would share the view [that] there is mounting chaos’). But that awful precedent will not have been far from Gordon’s mind as he stepped on the tarmac. The news was plastered over every front page in every city in the world: a stock market meltdown in which serious financiers were talking about a collapse in the world banking system. And this was the ghastly backdrop against which the PM was trying to sell Northern Rock.

The old Brown jinx, which accompanied his calamitous sale of British gold reserves five years ago (at $275 an ounce, against today’s $850 an ounce) was back. Stocks were plunging, house prices falling, investors fleeing and — in about the worst context conceivable — Alistair Darling was in the House of Commons announcing his plan to offload a zombified mortgage bank. The terms are extraordinary: the taxpayer will be liable for the risks while would-be bidders could take almost all the profits.

Once, such a ruse would have worked for Mr Brown. It was fiendishly complex, and it would take several years (and at least one election) until anyone knew how much the taxpayer had lost. Yet from the Morning Star to the Financial Times this was denounced as an appalling deal designed to save Mr Brown’s reputation rather than protect the public interest. Northern Rock has become a kryptonite pendant against this self-styled financial Superman — and he would pay anyone anything to take it from him.

Certainly, the Prime Minister’s luck has turned. But there is something more fundamental than that. The mood, too, has changed — perhaps irrevocably. Even when the London stock market rallied, shares in Brown remained lifeless. In a landmark article, Anatole Kaletsky declared in the Times that ‘Mr Brown’s career as a serious politician ended yesterday’. No one can agree which of the disasters of the last few months struck the terminal blow. But a consensus is slowly emerging that, for Mr Brown, it is over.

The Conservatives should treat all this with cunning and forethought. Just as City investors switch tactics when a bull market turns to a bear market, so too must politicians adapt to the era of an economic downturn. The Tories have yet to do so. They must develop a critique of Mr Brown as powerful and simple as that which he used against John Major to such devastating effect. They must use this turmoil to take the clear lead in economic credibility, on which the keys to political power depend.

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Frank Leader

January 25th, 2008 5:31am Report this comment

In answering a question in Prime Minister's Question Time. Gordon Brown said "Only yesterday this morning" this would seem that he does not know what he is talking about. Further evidence of this, when replying to Kenneth Clarke he made a remark that Labour in 1997 inherited the economy in a mess from the Tories. This can't be true, we have had 61 quarters of uninterupted growth (61 quarters = 15years and 3 months). Labour have only been in office for just over 10 years. Therefore 5 years of the uninterupted growth happened under the Tories. I would seem that being Prime Minister is too much for him to cope with.

Dr. David Spooner

January 25th, 2008 10:04am Report this comment

The title of Fraser Nelson`s article promised much with its appendage "The Tories Should Seize the Chance." But he, like all leader writers, then drew back in apprehension. A `No Confidence` motion in Parliament is urgently needed, even if lost in the first instance. Action, not still more critiques, is the necessity.

Fraser A

January 25th, 2008 5:06pm Report this comment

I genuinely think that Gordon Brown believes his own hype and that his initiatives such as tax, borrow and be profligate really are a benefit rather than a hindrance for the economy. These are the policies which have so obviously caused the stagnation of Continental European economies he compares with so favourably – even the French seem to have woken up to the fact that the state does not hold all the answers. Brown has squandered the economic record he is so proud of by borrowing when the economy and tax receipts have enjoyed growth. He seems ashamed and unmanned by the few good acts he is responsible for such as the independence of the BOE and the reduction in capital gains tax to encourage entrepreneurs. The freedom of foreigners to live in the UK and bring their capital with them. Consequently we have little room to manoeuvre in a downturn and he has alienated those aspects of the economy which have helped sustain economic growth. When will he learn taxing less increases receipts, he only has to look at his own CGT concessions to see that.

Jon Livesey

January 25th, 2008 5:46pm Report this comment

One issue not mentioned here is that to some extent people no longer talk about parties, but about 'nomics. The party in power changed in 1997, but we all still talk about Thatcherism and free markets. The joke about Blair being a better Tory PM wasn't really a joke, because it said something deep about the reality of the situation. Continuity was a real strength for Blair as the "heir" of Thatcher. And that means that Brown is pretty safe as long as this perception continues. There are signs of creeping leftism in his policies, including closet nationalisation for this and that enterprise, but so far these are lefty grace notes. When Brown lets thing go so far that one can say that Old Labour is back, then the public psychology will change, but until then the perception that Brown is finished is pretty much one for commentators, not for the mass of voters.

j. pourreau

January 29th, 2008 2:26pm Report this comment

The chickens are coming home to roost! However much GB tries to rewrite history, most financial commentators would agree that he was handed an economy which was in a much stronger state than the one he will beqeath to Geortge Osbourne in 2010. It is a testament to Kenneth Clarke's excellent strwardship of the economy from 1992 to 1997, that the country has so successfully withstood 10 years of economic incometence so typical of a labour government.

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