Fear not. That which cannot go on for ever, won't.

Posted: Wed 1 Jul 2009 9 53 am

Gordon Brown is not building Britain's future, he's spending it

http://www.telegraph.co.uk/news/newstopics/politics/gordon-brown/5700986/Gordon-Brown-is-not-building-Britains-future-hes-spending-it.html

Gordon Brown's 'new' policies are already out of date, says Irwin Stelzer.

By Irwin Stelzer

The two PMs have set forth their views on Building Britain's Future. After an obligatory bow to the need to cut the deficit, Peter Mandelson and Gordon Brown laid out spending programme after spending programme â€“ the list is not only long, but includes a recaptioning of old, failed programmes that have done little to add to the employability of a generation of work-shy young men and women.

This document is about as out of touch with reality as Brown seems to be at Prime Minister's Questions. No wonder James Purnell, the former work and pensions minister, decided to jump ship before it hit the shoals of a market that will soon echo the Governor of the Bank of England's call for fiscal sanity â€“ a lower standard than Prudence, of course, but she was long ago interred, along with speeches about ending boom and bust.

Give Labour another chance and you will have more "health and social care servicesâ€¦ for the elderly and infirm"; the "guarantee [of] a sixth form, college or apprenticeship place to all school leavers"; a "Â£1 billion Future Jobs Fund"; "we will expandâ€¦ building programmes by investing a further Â£1.5 billion over the next two years"; "a new, more active industrial policy"; "broadband access for all"; "a new Â£150 million Innovation Fund"; "new infrastructure such as Crossrail and a new runway at Heathrow": "a major programme of rail electrification"; faster service from the NHS, "a personal tutor for every pupil at secondary school". Need I go on?

That post-recession Britain, even if growing at a reasonable rate, can afford this and more while paying off the debt accumulated during the downturn is something that only the Prime Minister can believe, or pretend to (I know not which, but rather hope it is the latter).

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.... then to propose a long list of new spending when the books are already awash in red ink, and taxes are as high as they can go without depopulating the entrepreneurial and financial communities, is somewhere between irresponsible and fantastic. Fear not. As the late Herb Stein, a US economist, once said: "That which cannot go on forever, won't." Brown's borrowing and spending cannot go on forever. As Mervyn King has pointed out, the markets won't wear it: interest rates will rise as deficit spending threatens inflation, the Bank of England will tighten credit, and any hope of economic growth at a reasonable rate will have to be abandoned.

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Building Britain's Future runs to some 126 pages. Not a sensible use of beach-reading time.