FOR GORDON BROWN’S many detractors it is a case of poetic justice worthy of Aristotle: the Chancellor will finally achieve his life’s ambition and become Prime Minister just at the point when the British economy goes into a tailspin and Labour’s apparently successful management of the public finances is exposed as a cheap conjuring trick.

For the first time since 1997, it is possible to imagine an economic scenario that would almost guarantee a quick demise for Prime Minister Brown. But just because something is plausible, it should not be treated as inevitable — or even as likely. It is very unwise for the Government’s opponents — and for Tory leadership candidates in particular — to base their hopes of sweeping new Labour out of office on a deus ex machina of this economic kind.

Both the threats to Mr Brown’s future and the equally formidable obstacles faced by his Tory rivals were eloquently described yesterday by the Governor of the Bank of England, presenting his quarterly economic report. Mervyn King was not, of course, moonlighting as a pundit or consciously making any political point at all. There is, in fact, no public figure more determined to maintain a strict neutrality and keep out of partisan controversy of any kind. But in discussing the many uncertainties facing the British economy and the Bank’s possible responses to these risks, Mr King delivering a powerful, if inadvertent, warning to over-enthusiastic partisans on both sides of the divide.

Let me begin with the bad news for the Tories. While the economy is certainly weaker than it has been for almost a decade, it is not yet in any kind of crisis — and there is very little risk that “the wheels will come off the economy” in Mr King’s homely parlance. The fact is that the Bank has plenty of scope to cut interest rates if the economy continues to weaken and, contrary to previous impressions, Mr King shows every sign of willingness to do so, provided the economic weakness continues and inflation remains under control. Thus the probability of Labour self-destructing in the sort of economic disasters that ended the Tory ascendancy of the 1980s and 1990s or the Labour ascendancy of the 1960s and 1970s, seems very small.

Now let me turn to the admonition for the Chancellor — and even more for his old Labour supporters who dream that they can return their party to its historic mission of building a socialist paradise by ousting Tony Blair. What Mr King made clear was that Britain’s economic performance really is now rather disappointing, with growth at the lowest rate for over a decade, and there is little prospect of a dramatic improvement in the next few years. Yes, the economy should stabilise (in the Bank’s view it seems to have done so already) and the housing market may even strengthen somewhat, but the probability of returning to the sort of boom conditions that Britain enjoyed under the first two Labour Governments is slim.

The crucial political corollary, which the Governor did not spell out but which the Chancellor is well aware of, is that the Treasury can have no hope of collecting the tax receipts it projected on the basis of much more optimistic assumptions about growth. And that tax shortfall means that among the first acts of a Brown government will be to cut public spending plans, not increase them, and to press for more privatisations, not fewer.

Even on the basis of the Treasury’s over-optimistic tax projections, the Government would have run out of money to continue funding the present growth of public spending by about now. According to the plans published in the last Budget, this year is supposed to be the peak for public spending growth. From next April onwards public spending increases are supposed to slow to the rate of growth of the economy — roughly 2.5 per cent a year, instead of the 4.5 per cent that the public sector has enjoyed since 2001. Yet health spending will continue to grow by more than 6 per cent annually and education almost as fast. As a result, the money available for most other public services would shrink in real terms, even if the Treasury were able to raise all the tax revenues it hoped. With weak economic performance undermining tax revenues, and with Government deficits already running at some £40 billion, it will be impossible to avoid much tougher action on public spending than anything imaginable to the Chancellor’s left-wing supporters.

Old Labour will, of course, respond that Mr Brown can simply raise taxes, once he was free to follow his own inclinations, instead of kow-towing to the neo-Thatcherite Prime Minister next door. But the Bank’s analysis delivers a strong rebuttal of the Left’s case for higher tax: in the Bank’s view, the tax increases imposed in the 2004 Budget have been the main cause of the economy’s surprisingly weak current performance. The Treasury’s official explanation, by contrast, is that the present economic weakness has had nothing to do with taxes and that Britain has been suffering mainly from the oil shock or the weakening of global trade. The Bank’s explanation is the more convincing — and implies that another big tax increase in the next year or two would have an even more damaging effect on an economy that is losing momentum.

If there is to be a tax increase, Mr Brown will not be able to get it out of the way in the first half of the new parliament without taking a huge gamble with economic performance. But if he is not prepared to take this gamble, his only alternative would be either to start planning ambitious cuts in public spending from 2008 onwards or to hit voters with higher taxes just before the next election, a course that he desperately wants to avoid.

Whichever course Mr Brown chooses, the Bank should be able to prevent “the wheels coming off”, but the Labour Party had better prepare for a rough ride.

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