This week’s U.K. budget has reminded Brits just how damaging the economic legacy of the Blair-Brown years has been. Writing in the London Times, Camilla Cavendish vents:
Two audiences need convincing that the Government is realistic about the challenge it faces: consumers and the City. In this, their interests are surprisingly well aligned. In the City, the talk yesterday was of “investor indigestion”. The Government surprised the markets by announcing that it plans to sell £220 billion of bonds, or gilts, to help to finance its gargantuan debt. That is twice as many as it sold last year, and more than any analyst had expected. The market will buy all of these bonds only if it is convinced that there is a credible “road map” back to stability. Investors are rightly asking whether a Government that blithely racked up £600 billion of public debt in the boom years is capable of prudence in the bust. A month ago, the markets were so jittery that an auction of 40-year bonds failed to find enough buyers.
I wanted the Chancellor to tell us how much of our prosperity in the past decade was an illusion. I wanted him to explain how he could predict efficiency savings that Labour used to insist were impossible. I wanted him to admit that monopoly public services are unsustainable and start an intelligent debate about their reform. I wanted him to give us a basic economics lesson about how governments get out of recessions as bad as this one. There aren’t many options: raise taxes; spend less; borrow more; print money; go to the IMF. But we deserve to know what he is betting on each one and why.
A Chancellor who had the courage and humility to explain his reasoning might have taken the people with him. But this Government cannot give up its use of Budgets for cheap tactical positioning. The person who gave us the economics lesson was Robert Chote, the lucid and independent head of the Institute for Fiscal Studies. He told us that half of the £90 billion of “fiscal tightening” in the Budget is unaccounted for, raising the spectre of more tax rises. I’d much rather have Mr Chote for Chancellor than ministers who take the public for fools.
The people who are keeping GB (Titanic) Enterprises afloat are the people who have worked hard, saved conscientiously and avoided debt. They are the people whose savings Mr Brown attacked in 1997 when he abolished the dividend tax credit for pension funds. They are the people whose businesses he has stifled with excessive rules. They are the people he betrayed by creating a regulatory system that allowed British banks to take on even more debt than those in America. He has now betrayed them again, by designing a Budget lifeboat that puts the Government’s interests ahead of the public’s and does not even begin to address the radical changes that are needed in public policy and the welfare state.
I note that Tony Blair, the man who made so much of this possible, continues to serve as an adviser to JP Morgan Chase. Not on economic matters, I hope.