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Creditability, Crunched

Gordon Brown came to office last year as the stability candidate, the iron chancellor who would see Britain through rough times. He liked to talk of prudence, of sticking to unbending economic tests and golden economic rules that sounded dull but disciplined. The stark and sad truth is that Brown has lost the economic plot, his credibility as prime minister is ebbing away quicker than the availability of a cheap loan. Here are five economic tests he has failed:

Governments should save for rainy days and inject that money into the economy when it enters choppy waters. This UK government did that in 1997 when it reduced public debt, giving it plenty of cash to spend a few years later. But it has failed to do the same trick twice.

When the private sector stops hiring workers, the state should step in and create public sector jobs. Today’s circumstances therefore warrant the Brown government increasing spending on public services rather than restricting it.

When the public stops spending money on the high street, the government should raise wages to maintain spending and therefore jobs. This government is effectively reducing wages by not keeping public sector pay in line with inflation.

When prices are rising for the basic necessities, taxes should be lowered for the poor. By scrapping the 10p rate, Labour is telling the working poor to pay the 20p rate – a tax increase by any other name.

Understand that if banks are wary of lending, there is a reason for it – they are doubtful the punters can pay the money back. Yet this government is pressing for banks to pass on the lower interest rates that the Bank of England has set. Cheap loans are what caused the problem in the first place.

In defeat, some hope

Beware the moderate.