Saturday, August 30, 2008

Mr Brown and Mr Bean

From the Socialism Or Your Money Back blog

In his last speech as Chancellor in 2007 Gordon Brown boasted that “after 10 years of sustained growth, Britain’s growth will continue into its 59th quarter - the forecast end of the cycle - and then into its 60th and 61st quarter and beyond”.

There was always something dishonest about this. There are only 4 quarters in a year, so if growth was going to be sustained into a 59th quarter, this must have meant that it had been going for nearly 16 not just 10 years - in fact since 1992, when the last recession ended. Ten years was chosen by Brown of course since it was ten years previously that he became Chancellor following the Labour victory in the 1997 General Election.

Brown’s boast was supposed to imply he had devised a way of breaking the boom/slump cycle and avoiding a recession. As he predicted (or, more accurately, guessed), growth did continue into the 59th, 60th and 61st quarters (the last three quarters of 2007) and “beyond” into the 62nd, but only just. Corrected figures just released for the 63rd quarter (April to June this year) show that growth has now stopped. The expectation is that the 64th quarter will show a fall. If the 65th does too, as is highly probable, then the British economy will officially be in recession (defined as two successive quarters of “negative growth”, i.e. decline). But we won’t know till the figures are announced sometime next year.

Brown’s boast has been exposed as groundless. He didn’t engineer growth. He just happened to be Chancellor (just like his Tory predecessors from 1992) when world market conditions allowed an expansion of the British economy. Now that they no longer do so, there is nothing he or any other Chancellor can do about it. But if he is being blamed it is his own fault for claiming that the ten-year period of “sustained growth” was due to the policy he chose to pursue.

He can’t have it both ways. He can’t claim credit for the growth years and blame the world market for the bad times. If he’s responsible for the good times then he must also be responsible equally for the bad times. Actually, he’s responsible for neither since governments and finance ministers do not control the workings of the capitalist economy.

Meanwhile the Deputy Governor of the Bank of England Mr Bean - yes, that’s his real name - says that he and his colleagues are crossing their fingers that things won’t get too much worse (see here). Which is about all they can do.

Adam Buick

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