Monday, November 17, 2008
Government and Opposition Gambling With Our Economic Future
Like City traders they are both buying 'futures'; gambling on outcomes. Rawnsley puts it this way:
Mr Osborne will have made the wrong bet if Mr Brown comes out of this looking like the bold saviour of the economy. The Prime Minister's reward will be the gratitude of the voters and a juicy big split in the Conservative party.
The big peril of cutting taxes while boosting spending is that this shatters confidence that Britain can pay its debts. Sterling has already tumbled by more than 25 per cent against the dollar in less than three months. The pound is now at an all-time low against the euro.
Meanwhile the benefits of offering tax cuts are possibly reflected in poll results reported in the ST yesterday showing Labour catching up with the Conservatives in a way which always seems to spook their high command. From being some 20 points ahead a few weeks back, the Tories' lead is now only 5 points. This will bring comfort to Labour, but Rawnsley's analysis suggests it might be shortlived. It could be that the markets will pronounce Gordon's gamble a loser This is a high stakes game being played with our economy:
The Prime Minister has to take a double-or-quits gamble. The Tories do not. George Osborne's critics are only thinking eight days ahead. He is trying to see 18 months ahead. That makes the Shadow Chancellor smarter than those Tories who want to toss him overboard.