Fraser Nelson

Brown’s latest confidence trick

Brown's latest confidence trick
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One of the Brownie's we've been hearing recently from the Dear Leader is that it is in some way ambitious to "halve the deficit by 2014". It's a Brownie because it is technically accurate, yet designed to mislead the voter. Two years ago, he forecast no deficit at all by 2014. Now he's projecting one of 5 percent of GDP - simply mammoth - and still makes out that this is something to be proud of. It's a confidence trick: the voter is supposed to think 'I don't know about the figures, but if he's boasting about it then it must be good'. When Brown told the Economist that his deficit reduction plans were the most aggressive of any major economy, I went rushing for my spreadsheets to disprove it - but, alas, no one has collated the medium-term projections of other countries to test this against. Until now. God bless Michael Saunders at Citibank, who has published the below chart showing that even Italy (a G7 member) will have wiped out its deficit by the time Britain will - under Brown - have halved it.

This is a classic Brownie, because when he says "we will halve the deficit" he wants voters to hear "we will halve the debt". You'd be amazed how many journalists, even financial journalists, don't know the difference between the two. The BBC news routinely mixes the two up. Where there is financial illiteracy, Brown sees a chance to mislead the voters.

But the more important point is that to have only halved, rather than repaid, a deficit over four years is appalling. To aspire to be borrowing 5 percent of GDP by 2014 is an utter disgrace - and not a trajectory that Britain's creditors will accept. Saunders does not include America, but the Congressional Budget Office (how I wish we had one here) estimates deficit of 11 percent of GDP in 2009 hitting 3.2 percent by 2013 - so a far faster rate of reduction than Brown outlines.

PS: Actually, even politicians mix up "debt" and "deficit" and the concepts behind them. From Cameron's webcast today.

Take the deficit. Gordon Brown says we can put off dealing with this until another day. We say: no, we must act now to show the world we're serious about paying back our debts." I do hope Cameron knows that his government won't be paying back debt, not a penny of it. If he's lucky, net debt under the Tories would go up by 20% rather than 35% over their first parliament.

PPS: I do love Cameron's line in that video about people having to flog off military medals to make ends meet. Thanks to Lord Ashcroft's monopoly on the VC market, these people will get about £250k for a VC now. It makes them, and him, a lot richer. Elliot Wilson wrote a piece about it for us here.