What will Gordon Brown's legacy be?

It may seem premature to be asking such a question, but let's look forward to July 2010 when, according to the opinion polls, we'll be governed by David Cameron's Tories.

It all depends on what happens to the economy over the next year. If Gordon Brown and Alistair Darling are right in their predictions then we'll have had one year of a recovery and they will be classed as brilliant minds who managed to pull Britain out of a deep recession or maybe even a depression. Gordon Brown will be a Chancellor par excellence. Also, if they are right then they will probably deserve to win the next election and we will be thinking that history has been cruel to them.

My own opinion differs somewhat from the above! Already, the economy seems to be much worse than the pre-budget report set out. If we do start growing in the third quarter of this year, I'll go out and buy a lovely hat, bake it and have it with some HP sauce. I think the economy will get worse during this year and maybe, just maybe, at the bottom of the cycle by year's end. This means that a recovery may be under way come the election, but the price will have been many billions of pounds seemingly squandered which made not one iota of difference to the recession. The public will be angry looking at the increased taxes which will be heading their way like a heat seeking missile.

Given my view, as it is, I think Gordon Brown will be seen in a similar light to Herbert Hoover. He took over in a boom and left in a recession. The previous years were all ruled by Republicans who did not spot the inflating bubble. Gordon Brown's tenure as Chancellor will be shaped by this view too. He mentioned the housing bubble in 2005 and did nothing to deflate it. People who still say that he was a good Chancellor will have differing views come 2015.

What of his other achievements as PM? It's pretty hard to think of them. He promised change, and we got change - a recession - but I'm not sure that was the intention. He was going to get rid of spin and sleeze, well I don't think that's been achieved. The announcment of reductions in British troops during the Tory Party Conference in 2007 put paid to spin, and now the big spinners are back in GB's tent. Sleeze is back with a vengeance now that four Labour peers have been accused of taking cash for changes to legislation.

What else? A big new housebuilding scheme - very unlikely given the economic circumstances. Eco-towns, struck down by Nimbyism. Great Britain day - disappeared. NHS constitution, ok I'll give him that - but until it makes a difference to the care people receive we'll have to wait and see.

I think that history will see him as a bad Chancellor and a desperately bad PM, characterised by high taxes, shocking waste, dithering, a complete lack of empathy, arrogance and bad temper.

Squiffy.

No More Inflationary Tory Boom and Bust

The Prime Minister was on the today programme this morning being interview by Evan Davies. At one point Evan asked him about the now legendary phrase of 'no return to boom and bust', and the PM couldn't - just couldn't - bring himself to say that it had been a mistake to utter those words.

When he said the words some voters may have been convinced, and went out on a spending borrowing splurge leading now to a greater boom and greater bust. So apart from being a factual mistake now that we're in 'bust' - he may have actually influenced behaviour to make it more likely.

It's funny that when we all realised we were heading for a recession Gordon Brown then started inserting the word Tory into the phrase - 'no more Tory boom and bust'. As if that means anything to the people who are now having their pay cut and are losing their jobs. Incidentally, it would be impossible for Gordon Brown to bring about a tory boom and bust as he was a Labour Chancellor. So that was some weird kind of thinking.

This morning he's changed the phrase again to 'no more inflationary boom and bust'. Oh well, that's ok then. It's so much better to be in a credit crunch, possibly deflationary boom and bust than an inflationary boom and bust. I don't think so. At least with an inflationary boom and bust we know which levers to pull. Gordon Brown is like the signal man in the 'The Great St Trinians Train Robbery', randomly pulling the levers without knowing which way the next train is going, when it's coming back and which way it's facing. He's mistaking activity with effectiveness.

One last point, yesterday Adair Turner - the new chair of the FSA - stated that new rules for banks would ensure that they increased capital in the good years to cope with less income in the bad years. Maybe he should apply that to Governments too and tell the PM, then maybe we wouldn't be looking at £1 trillion debt over the next few years.

Over and out.

Squiffy.

Ron Dennis to head the FIA?

Ron Dennis has announced that he is stepping down from the team principal role within McLaren. Last year while Max Mosley was embroiled in his 'strapped for cash' he said that he would not seek re-election as FIA president but I think he will do a U-turn and stand again. He likes the power.

I've just had a cheeky thought. Maybe Ron Dennis should stand for FIA president, probably against Max. The two men loathe each other, and after 2007's McLaren punishment it would be sweet justice for Ron to oust Max.

Sometimes dreams do come true.

Squiffy.

The Euro is a matter of foreign policy

I've just caught up with today's Daily Politics. Denis MacShane seemed to be affronted that it was William Hague who made a statement about the Tory party position on joining the Euro rather than George Osborne.

I don't see the problem. Membership of the Euro is a matter of economics and foreign policy, they are intertwined. Proponents of joining the Euro don't seem to think that ceding part of your economic policy affects sovereignty. I think it does.

Let's see how the Pigs do (Portugal, Ireland, Greece & Spain) coping with the recession within the constraints of the Euro.

Now back to Most Haunted Live.

Squiffy

KC/DC?

Most of the speculation around Westminster and the right of centre blogs revolves about the forthcoming Shadow Cabinet reshuffle. So I thought I'd add my own thoughts.

It's unusual for a Shadow Cabinet reshuffle to be so anticipated, usually they pass with only a small amount of comment. Of course this time the speculation has been mounting on the Ken Clarke Question? Should David Cameron bring Ken Clarke back?

The Tory right are fuming at the prospect of bringing this Europhile back into a front bench position, but should they be wary of Ken Clarke? In the Euro wars which inflicted so much damage on the Tory party, the right won. The Tories now oppose nearly every integrationist treaty and Euro membership. If Maastrict had happened now, the Tories would oppose. The Europhile wing of the party is vastly reduced in number and has virtually no sway on the party.

So should the right fear setting the cats amongst the apple cart by bringing back Ken Clarke? I don't think so. Unlike the Major Government when Europhiles and Europhobes were pretty much in equal number and tearing the party apart on a daily basis, the issue is resolved. It would be up to Ken to tow the party line, and any attempts to tie DC's hands over a Euro issue would be resolved with KC's exit. Ken Clarke would know this from the outset.

So what benefits could be gained? He was a fine Chancellor who did leave the present Government a golden legacy, he speaks with authority and he's a man of the people and not a part of the Notting Hill set. It has been a tragedy that this man has not been on the front line, and he is partly to blame for not wanting to put the hours in tackling the Government on a daily basis. But his presence, in the Business brief would soup up the Tory attack now, and they need it...

In one way, Gordon Brown bringing back Peter Mandelson was a sign that the Labour party could be reconciled after the TB-GBs. Bringing back Ken Clarke would be a sign that the Tories are back as a fully fighting force after the Euro wars.

So bring it on.

On a similar note, who else should be brought back and who should be let go. It's a shame David Davis did his foolish (but honourable) resignation last year, because he should be the next Home Secretary but I can't see DC giving him another chance this side of an election. I'd bring back Patrick Mercer too as he speaks with authority on defence. I think it's time for Caroline Spelman to go back to the back benches for a while, and so too Peter Ainsworth, he's just been too invisible. I wouldn't get rid of Alan Duncan, he's also got the common touch when explaining the Government's mess.

Anyway, my tuppence.

Squiffy.

Politicians in disguise

The world has gone mad. Gordon Brown has said that he thinks Optimus Prime from the transformers would solve most of our problems. The Tories have countered saying that Brown's got more in common with Decepticon. Is this the level of our political discourse? Maybe it's time for a new cartoon, Optimus Prime Mentalist vs DeceptiCam.

Squiffy.

Let's learn to save

Yesterday's announcement by David Cameron that the Tories are to propose abolishing basic rate tax on the interest earned on savings has got to be welcomed. Many people throughout the land have saved their money so that they can enjoy a good retirement living off the interest. And while the young 'uns, like myself, welcome lower Interest rates so that our mortgages are cheaper, it can decimate a pensioner's income. Reducing the tax on interest won't solve the problem, but it can certainly help.

There is also the moral case that someone shouldn't be taxed on earnings and then taxed again if they choose to save it rather than spend it. It will inevitably get taxed when it gets spent anyway, though VAT. This Government inherited a household savings ratio of nearly 10% of income in 1997, which is now down to just below 2%, showing just how much our savings culture has all but vanished. With figures also showing that household debt has ballooned is it any wonder why we're in a credit crunch built recession?

We need to learn to save again and rid ourselves of debt, saving to spend rather than borrowing to spend needs to be the new mantra. Let's each do our bit, I'm now going to put the money saved from the reduced mortgage interest payments into paying the mortgage off sooner. The Government needs to do likewise and reduce spending on extraneous projects (not NHS and Schools, but ID cards and expensive IT projects) and reduce its borrowing.

Only then will we have learnt the lessons of this credit crunch induced recession.

Squiffy.

No time to join the Euro

In yesterday's and today's papers there are two articles about whether we should join the Euro. In yesterday's Times Oliver Kamm states that we should join now. In today's Mail Peter Oborne says that the Euro will not see another 10 years and that we should not join.

Oliver Kamm believes that the first ten years of the Euro have been a success and it is now challenging the Dollar as the world's reserve currency.

Peter Oborne believes that the stresses of the recession will lead to break-up of the Euro Zone and the death of the Euro.

I think it is useful to separate the Euro as a currency from EMU (Economic and Monetary Union) to align these two views.

I think that after a shaky start the Euro has indeed proved to be a successful currency. That's as it should be, representing 16 nations, now that Slovakia has joined, and 300 million people it should be successful. Many people who wish us to join the Euro believe that it should be easier to travel without changing from one currency to another, and that without the cost of changing money from one currency to another the costs to business can be reduced. For this reason the Euro looks attractive.

EMU is the overarching principle for which the Euro was created. One single market, one currency and one central bank to align the economies of Europe. Thus far, though, EMU has only had to contend with relatively benign economic conditions.

The next few years will determine whether EMU and the Euro have a long term future. There are four main levers that Governments use to affect their economy; Interest Rates, Exchanges Rates, Tax Rates and spending. EMU has removed control over Interest Rates and influence on exchange rates and so Euro Land Governments only have control over their spending and tax levels. If the Euro Zone countries cannot effectively manage their tax and spending in these difficult times strains will be placed on EMU and the central bank. The central bank has to cope with the demands from 16 different countries and may not be able to help as much as necessary. Stresses may become amplified in such circumstances (such as those that affected Britain's exit from the ERM).

Countries which were closely aligned when EMU was launched should cope well, those that fudged their budgets and entry criteria to become members of the club may find themselves diverging from the economies of the Euro Zone and finding it ever more difficult.

If EMU survives with all 16 members still operating the Euro at the end of the recession, then it will have passed the test and may become the world's reserve currency (although I think the Chinese Yuan is more likely to supplant the Dollar) . Otherwise Peter Oborne will be proved right.

Until the recession is over and we're well into recovery it is too early to say which is right. For now, I prefer to have all four economic levers at our disposal even if our Government are not using them correctly!

Squiffy.

10 predictions for 2009

Here's some predictions for 2009, let see if I can do better than 4 points for 2008!

1. There will be no general election in 2009. Although Gordon Brown will have been lining up a May/June election for seven months, the polls won't look good enough to risk it, and so GB will go until the last moment in 2010.
2. The recession will last throughout 2009.
3. Several other high street names will experience problems. I'm guessing at HMV, W.H.Smiths, and Robert Dyas. I just hope I'm wrong.
4. Interest rates will reduce to 0.5%, the CPI will also go down to 0.5%, and the RPI will briefly go negative.
5. Robert Kubica will win the F1 World Championship.
6. A bad set of economic figures in the beginning of the year will signal a reversal to Labour's recovery, the polls will go back to a good Tory position of Con 45%, Lab 26%, LD 17% by year's end.
7. Ken Clarke will come back as shadow Business secretary.
8. David Blunkett will come back as Home Secretary.
9. The Tories will win the Local/Euro elections on a percentage share of 43%. Labour will get 22% with the LibDems at 26%.
10. Peter Mandelson will be forced to resign over some business dealings as EU Comissioner.

Squiffy.