Brown now a lame-duck prime minister
GORDON Brown may be an expert at surviving the internal struggles of his party but he and Labour are headed for political oblivion. It doesn’t matter how you look at it – a 15.7 per cent share of the vote and third place after the Tories and Ukip is a catastrophe for a governing party. A poll last night suggested Labour could still rob the Tories of an overall majority in the House of Commons if it replaced Brown by Alan Johnson, the home secretary. So Brown’s decision to cling on as a lame duck prime minister is the best possible outcome for the Tories.
So while they wait for Labour to self-destruct, what should the Tories focus on? They need to prepare for their first hundred days, which will mainly be about getting to grips with the public finances. This is the great challenge for them; fortunately, Francis Maude, a former Morgan Stanley banker in charge of the party’s eight-strong transition team, including some secondees from City firms, is well aware that government needs careful planning and preparation. Lets also hope that he realises that teams of special advisers will be needed to take over departments; relying only on civil servants will be a recipe for disaster.
The next government will have many challenges. One big one will be to improve on Brown’s weak economic performance. I’ve spent some time crunching the numbers and it is not pretty. It will take years before the dust settles and we get a better idea of how different economies performed in the past 10-15 years; some of the reported growth in recent years has turned out to be mere froth and has been wiped away by the recession. But it is clear that Britain under-performed many of its competitors, including America, Canada, New Zealand, Australia, Finland, Greece, Luxembourg and even Spain, as well of course as all the emerging economic giants, led by India and China. Our financial system has turned out to be catastrophically unstable; and certainly far less robust than the likes of Canada and Spain, economies which both boast large, global banks.
The British economy grew for 63 consecutive quarters, or close to 15 years, starting in the third quarter of 1992 and ending in the first quarter of 2008. It has subsequently collapsed by anything up to 6 per cent already, a much more severe recession than any post-war contraction bar that of the early 1980s, when Margaret Thatcher was forced to squeeze rampant inflation out of the system. It has also been the most costly recession of all times in terms of extra debt built up to bail out the banks and to pay for the bloated public sector.
As periods of growth go, Brown’s wasn’t especially impressive, even before one considers how it all ended. The British economy grew for 26 consecutive years between 1947 and 1973 – with a faster average growth rate, despite a few negative quarters. The first 20 quarters of the 1992-2008 period took place under Tory rule, when the economy grew by 0.77 per cent per quarter in the absence of a bubble, and with stagnant house prices, high savings rate and strong fundamentProxy-Connection:keep-aliveCache-Control:max-age=0s; during the Brown years, this slipped to around 0.69 per cent, even though the last few years were propped up by an unsustainable expansion in financial services and consumer spending which is now in the process of being painfully unwound. The Tories will have to do better; the public will expect no less of them.