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Generally I’m pretty good at not letting politicains irritate me but I think I’m reaching my limit with Gordon Brown.
His New Year message was pretty maddening, but the last straw was his odd interview with Andrew Marr on the BBC on Sunday morning.
My problem with both these things? Brown’s ongoing determination to pin the world’s economic problems and in particular the UK’s economic problems on the US. His trick is to refer to “our strong economy” every couple of sentences and then to refer to all the signs that it is anything but as being related to the “global credit problem that started in America.”
This is verging on the dishonest. Sure the first signs that the credit bubble was bursting, to be replaced by an ongoing credit crisis, did appear in the US but that’s not why our economy is in trouble. It’s in trouble because our own banks have been lending with the same gay abandon to the same kind of over stretched subprime borrowers as the US banks have; because our interest rates have been kept too low for too long and so encouraged the creation of a vast and unusustainable housing bubble; and because incentives to save have gradually been removed (note the failure to increase the ISA allowance, the raid on pension funds, and the failure to properly reform the annuity system just for starters).
It’s also in trouble because we have given up our manufacturing industry almost entirely in favour of services; because we have relied on low prices coming out of China to keep inflation down rather than addressing the structural problems in our own economy that were always going to push it back up again; and possibly most importantly because our public finances are a complete mess.
A mere eight years ago the UK had a budget surplus. Now, despite what we keep being told has been the longest period of growth in history and the massive rise in the tax take with which it has coincided, we have a huge and rising budget deficit.
So now, just when we need Brown to start spending to get us out of the trouble we seem to have fallen in to on his watch, he can’t come up with the cash to do it. How exactly is that America’s fault?
First published in The Evening Standard 8/1/08
Published in
Economics
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by
Merryn Somerset Webb
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