Swift, yes. Decisive, yes. But right?
6 Jan 09
Prime Minister Gordon Brown looked at his best when the economic crisis was at its worst. Now, we’re all waiting to see some positive results.
Gordon Brown was everywhere on the media over the weekend, warning of tough challenges to come this year and losing no opportunity to remind us that as PM he has taken “decisive action” to tackle the crisis.
There’s no doubt that bold steps have been taken: a major recapitalisation at public expense of the banks in the most trouble, a cut in the rate of VAT to stimulate consumer demand and a raft of public spending measures to preserve jobs.
Brown said that after just £1 billion has been spent out of an £18 billion package of measures, it is too early to judge the programme a success or a failure. He has a point, but in one area where we could expect to see results, liquidity in the banking system, there has been very little to show for a massive outlay.
A poll of CFOs carried out for Deloitte shows that finance chiefs still see credit as costly (despite unprecedented cuts in the Bank of England’s interest rate) and hard to obtain.
Two things would be welcome now. First, let’s see some action on the part of the banks to show that the billions of public money invested in them has done more than simply make their shareholders feel more secure.
Secondly, let’s see Gordon Brown taking some more responsibility for what went wrong. Both the Labour government and Conservative opposition displayed a “light touch” approach to regulation and a relaxed attitude to consumer debt, that have together helped to make the UK one of the worst hit economies. Some humility, rather than self-congratulation, is called for.