If anyone can be said to be enjoying the awful financial crisis it is Gordon
Brown. No 10 erupts at my mention of the word “enjoyment” – it’s unbecoming
to take pleasure in our woes – but all the same one source close to the
prime minister boasts he has visibly “come into his own”. The message comes
loud and clear that Brown believes this is his Churchillian hour, the moment
for which his ministerial career, his hours of study and his hard work have
prepared him.
“It’s the global economy, stupid,” the prime minister tells me. If he can show
leadership to the world by example, if he can prove that his package to
rescue the banks is a blueprint for stability, Brown can hope to be hailed
as the saviour of the financial system. Globalisation is having, in his
words, “teething troubles” so it needs to be nursed through to a new
financial order.
And another trifling matter: Brown’s electoral fortunes might revive too. The
polls are beginning to narrow from the days of extravagant 20-point Tory
leads.
The prime minister wants to prove it is he, not David Cameron, who is the “man
with a plan”. His ambitions extend beyond coordinating the response of the
G7 group of western countries tottering amid the crisis to a wider deal with
the oil suppliers.
Because the price of a barrel has dived from $145 to below $80, Opec, the
petroleum producers’ cartel, is proposing to cut production to jack up
prices. Brown aims to convince the Arabs and their friends that by plunging
the West into recession they will ultimately harm their own economies. Far
better to invest their profits in the green energy before the wells dry up.
The prime minister has called a summit in London of oil consumers and
producers for December 17 that follows the groundwork he laid in Jeddah in
June.
“Remember you are mortal,” as the slave reminded Roman generals in their
triumphs. And in this case the campaign is not yet won.
As so often in politics, choreography matters. Brown makes a point of looking
serene in public, perhaps remembering reports – wrong, as they turned out –
that John Major hid under the cabinet table at one point during Britain’s
expulsion from the European monetary system. The diaries of Bernard
Donoughue, James Callaghan’s special adviser, reflect the burden placed on
Denis Healey when Britain faced bankruptcy in 1976. The author is forever
searching the chancellor’s face for signs that he is “cracking”, for his
eyes were red and moist with sleeplessness and perpetual worry.
Brown lets it be known that he went to bed at 10pm the night before his
recovery package was formally announced, so confident was he of its
preparation. He found time to speak at the Cheltenham literary festival on
Friday. No 10 says he has “an inner calm”. Alistair Darling, too, parades
his stiff upper lip. The chancellor left his crisis meeting with the bankers
on Monday evening at the Treasury to have a relaxed drink with a few
commentators.
It’s just a bit contrived – like that scene from Carry On Up the Khyber when
Sid James, as the unflappable governor Sir Sidney Ruff-Diamond, refuses to
interrupt his dinner party as the marauding Burpas’ (sic) shot and shell
falls into the soup.
No 10 is quick to suggest dividing lines with the Tories – so much for
national consensus. Brown’s personal ties to European leaders are emphasised
– Sarkozy and Merkel especially. The Tory hardline position on the European
constitution would isolate Cameron in a crisis like this, it is claimed. As
for Brown’s relations with the White House, “contrary to what is sometimes
said, President Bush often calls him about economic matters”.
Another big difference between the government and the Tories will come over
cuts in health and education. “We made a comprehensive spending package to
see us through hard times,” I am told. “The Tories support it but would cut
back spending. It requires more borrowing, not cutting education.”
This grandstanding invites the charge of hubris. The prime minister may be
getting a little ahead of himself in implying he has turned round the
British economy. The voters may see the implications of global turmoil
through a glass darkly. But they do understand the poor state of the “real”
economy is going to hit their wallets.
Opec may not lie on its back and ask for its tummy to be tickled either. The
International Monetary Fund’s gloomy predictions for this country next year
and Capital Economics’ miserable forecasts of £100 billion borrowing for
each of the next three years mean the new terms of political trade are bad.
When challenged, Brown replies, “I’m more interested in the next few days
and weeks”, but it is still a case of payment postponed.
The general election of May 2010 is going to be fought against a different
background. The blame game about who was responsible for weakening the walls
of the British economy upon which the storm broke has been set aside for
now, but not for ever.
Cameron’s Conservatives are certainly on the back foot, but steely calm isn’t
just for prime ministers. The Tory leader is taking a tip from Barack Obama
in America. The Democrat candidate allowed John McCain to rush around
boasting of victories on the economy that later turned out to be defeats.
Obama hasn’t always had a convincing story on the great crisis but he hasn’t
made a fool of himself either.
Mistakes are often made by oppositions nervous that the government is
dominating a big story. The only way the Conservatives can barge in is by
saying something stupid. A senior Tory says, “We are making no attempt to
grab the front page of the newspapers.” The voters, he hopes, will remember
Cameron’s judgment and character when it is all over.
His best bet is to connect the great hurricane on Wall Street and the City to
Acacia Avenue. The Tories suspect that Brown’s failure to relate to Everyman
is terminal. Middle Britain has a better chance of grasping their concrete
proposals to raise the limit of bank deposit insurance cover and to help the
pensioner who is forced to buy his annuity when stock market prices have
collapsed. These are pocketbook issues. Only when he departs from this
script, as Cameron did in prime minister’s questions on Wednesday, will
Brown’s great clunking fist find its target.
The opposition have to bear the brunt of Brown’s new vigour but the fallout
for the Scottish National party may be more severe in the long term. Alex
Salmond, the SNP’s wily leader, used to urge his fellow countrymen to join
the “arc of prosperity” of Ireland, Norway and Iceland. In the words of Jim
Murphy, the new Scottish secretary, this trio looks like “an arc of
insolvency”. Improvident Iceland is in the hands of the receivers.
North of the border financial institutions have behaved recklessly. Bank of
Scotland bought a much larger English lender, Halifax, claiming it could
manage it more aggressively. The BOS emperor had no clothes. And what of
Royal Bank and NatWest? A smallish Scottish bank borrowed massively to buy a
successful if sluggish English bank. Last week it tanked, helping to trigger
a rescue deal underwritten by English taxpayers to save a Scottish-based
bank, and indeed (openly in the case of HBOS) Scottish jobs. If a referendum
in independence were held tomorrow Salmond would have as much chance of
winning as of tossing the caber across the Firth of Forth.
Really bad news is mostly good news for Brown in the short term, but the
voters are seldom grateful for services rendered. They pay governments to
fix problems and then demand: “What next?” Unless the young Blairites in the
cabinet – bright new boy Liam Byrne included – are given space to develop a
strategy, the government will lose its way again as it did so disastrously
after the floods and foot and mouth emergencies last year.
The prime minister has a love of history: I would remind him that the best
political parallel is 1929-32. Most major governments in power in 1929, with
the exception of Fascist Italy, fell by 1932.
Brown hopes this financial war will be his equivalent of Margaret Thatcher’s
Falklands turnaround of fortunes. Instead he may find that his success will
mean all the difference between getting a gold watch or none on his
compulsory retirement by the voters in May 2010.
