The news that over 100,000 people are likely to be recorded as insolvent during 2006 provides a stark reminder of the core failure and excesses of New Labour. Leaving aside the fact of growing regional and individual wealth inequalities; a growing trade deficit; the loss of over a million manufacturing jobs; and the pensions crisis, Gordon Brown deserves firm criticism for an economic strategy built on sand.
Most economic commentators agree that Gordon Brown has been a lucky Chancellor, he has also been a very calculating one with a talent for cooking the books. We all know about the way in which the goalposts on the Golden rule (the government may only borrow to invest over the course of an economic cycle) has been shifted, but little attention has been given to how Brown has exacerbated borrowing to fuel consumer spending by a cold and calculating move which threatens to de-rail the economy in the long term.
I am referring to Browns decision to change the measure of inflation from a broad based formula to one that only concentrated on consumer prices (the consumer price index was adopted in 2003 by the MPC to calculate inflation). Consumer Prices have remained low due to cheap imports (further eroding our manufacturing base) meaning that the MPC has kept interest rates low at a time when other facets of the economy such as house prices and energy bills have been going through the roof.
As a result of hyperinflation in the housing market fuelled by low interest rates, people have been borrowing far in excess of what they can afford - caused mostly by a false feeling of wealth due to equity in their homes.
Little wonder with unsecured debt in the UK far above the £trillion mark that insolvencies have hit record levels - with the worse to come. The long term outlook isn't very good.
Most economic commentators agree that Gordon Brown has been a lucky Chancellor, he has also been a very calculating one with a talent for cooking the books. We all know about the way in which the goalposts on the Golden rule (the government may only borrow to invest over the course of an economic cycle) has been shifted, but little attention has been given to how Brown has exacerbated borrowing to fuel consumer spending by a cold and calculating move which threatens to de-rail the economy in the long term.
I am referring to Browns decision to change the measure of inflation from a broad based formula to one that only concentrated on consumer prices (the consumer price index was adopted in 2003 by the MPC to calculate inflation). Consumer Prices have remained low due to cheap imports (further eroding our manufacturing base) meaning that the MPC has kept interest rates low at a time when other facets of the economy such as house prices and energy bills have been going through the roof.
As a result of hyperinflation in the housing market fuelled by low interest rates, people have been borrowing far in excess of what they can afford - caused mostly by a false feeling of wealth due to equity in their homes.
Little wonder with unsecured debt in the UK far above the £trillion mark that insolvencies have hit record levels - with the worse to come. The long term outlook isn't very good.
No wonder Gordon is in such a rush to get to Number 10.
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