by David Mills
POLITICAL commentators, especially those of a right-wing persuasion, have been competing to tar Gordon Brown with the brush of previous Labour leaders. For some, he’s the political incarnation of Michael Foot or Tony Benn, since the Government’s semi-nationalisation of several leading banks harks back to the party’s infamous 1983 general election manifesto.
For others, he’s James Callaghan, whose economic policy saw Britain termed the sick man of Europe and on whose watch the International Monetary Fund was called in to bail out the British economy.
The truth is that the current situation has no easy historical parallel. The depth of the financial crisis dwarfs any economic challenges that the country has faced, and the magnitude of the borrowing envisaged by the Treasury puts it into a class of its own. But the political context has also changed. Gone are the days when negative economic news could scupper a government’s electoral chances, as an unexpectedly bad balance of payments figure may have done for Harold Wilson in June 1970.
If the British electorate still felt the same, Labour would now be rock bottom of every opinion poll, flattened by the deluge of bad economic news. Instead, people’s attitudes have changed and it’s this shift that offers the Government a route out of the present situation and a path to victory at the next general election.
A decade and a half of relative economic prosperity has played its part, but the crucial factor has been the revolution in the availability of credit. The idea of getting something you need now and paying for it in the future is second nature to most voters, and the language of ‘mortgaging the country’s future’, or bringing forward spending to the present, based on future performance is just what every user of a credit card has done for years..
Further, the worse the news that voters see on their televisions, the more they may be amenable to “emergency” steps, such as an increase in borrowing that will be paid back in the short to medium term.
But this is not to say that the economic situation has no downside for the government. The danger which Brown’s relatively assured performance so far during the crisis is, paradoxically, one of raised expectations and the image of the Prime Minister as the country’s economic guardian will take a pounding if he is not able, by political pressure or government fiat, to ensure that banks start lending again, to businesses if not to homebuyers.
This is the paradox in which Brown finds himself. The liberalisation of credit has contributed both to the present global financial crisis and to the development of a popular psychology on debt in which his willingness to borrow could be seen as the very epitome of prudence. But unless he takes measures to increase the availability of that credit in the weeks and months to come, especially to small businesses, the recession could be longer and deeper than it otherwise needs to be – with predictable political consequences for his Government.
