Friday, January 30, 2009

Gordon Brown's debt...


A Conservative party poster doing the rounds shows a newborn baby under the slogan 'Dad's nose, Mum's eyes, Gordon Brown's debt'

The implication is that typically, a Labour government's reckless spending has bankrupted the country, and our children will be paying for Brown's profligacy for years. As George Osborne says, 'in the end all Labour governments run out of money'.

There is an important nuance to be made here. The government, in fact, was perfectly solvent until the banking crisis took hold. Public debt in Britain was 42% of GDP in 1997, when Brown took over the Treasury, and is now around 48% of GDP (about 2/3 of the ratio for France and Germany, less than half Italy and Belgium, and about a quarter of Japan). So far, so not-particularly-damning.

But there is more. Without the rescue package for the banks, the ratio would be much lower - about 41%.

So, actually, Brown's stewardship of the government finances has been pretty conservative (small 'c'). Where the Tories could have a case, of course, is that Labour did nothing to arrest the spectacular growth of private sector debt, related in particular to the ridiculous housing boom Brown happily presided over. But that has nothing much to do with the government's fiscal position.

The Labour government - like all the others - missed the enormous bubble being generated by global finance, and - unlike many others - allowed British households to take on excessive debt. But to claim the government itself is heavily indebted is simply wrong.

So maybe the slogan should be 'Dad's nose, Mum's eyes, Mum and Dad's debt'. After all, aren't the Conservatives the party of individual responsibility?