Peter Hoskin

The Tories should clarify Brown’s “pro-cyclical” admission

The Tories should clarify Brown's "pro-cyclical" admission
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Looking back on Brown's Wednesday press conference, his admission that the UK regulatory system was "probably too pro-cyclical" seems particularly significant. To my ears, it's the closest he's got to saying they his tripartite system just didn't work, and the closest he's come to admitting a specific error. Yet the opposition parties haven't made much of it since, which got me a-wondering why.

My guess is that Brown's language has dissuaded them from launching an attack. One of the PM's great skills is to hide bad news behind financial jargon and lingo that don't make sense to the average person. In this case, if the Tories were to major on Brown's "pro- cyclical" admission, then they'd probably be met with a general shrug.  Truth is, terms like "pro-cyclical" just don't capture the public imagination.

The solution is to throw the Brown Lexicon out of the window; and not abide by what are, literally, his terms of debate. Instead of saying "pro-cyclical", spell out what it means, so its significance can hit home. As it happens, the London Summit document released by the Government does it perfectly, noting that:

"Overall, the regulatory framework had arguably become ‘pro-cyclical’ – encouraging excessive lending in the ‘good times’. The UK Government has asked Lord Turner to consider what reforms need to be made to financial regulation."

An attack based rather on Brown's admission that his regulatory system "encouraged excessive lending in the good times" could well have some traction...