Wednesday, 30 December 2009

Big On Talk, Short On Ideas

Some things don't change. Over a year after the biggest collapse in the financial system since the Depression and after six successive quarters of contraction, the best Gordon Brown can do is to talk about growth.

There was precious little about delivery of this growth or how he would 'fairly' cut the budget deficit but the careful manipulation of Peter Mandelson is clearly at work on the puppet strings. After an unlikely recall to the administration and a fast track back into politics via a peerage, Mandelson has become the most powerful man in Britain. Clearly, his help comes at a price and Brown is all but a political husk, but how the gamble has paid off. When Mandelson took his ermines Labour's position at the polls was nigh on on dead. A year later, plenty of talk and little action has somehow got them back into a position where they actually may win again. After all, Blair won the last election with a mere 34% of the the vote and that won him a 167 seat majority.

So this latest 'New Year Message' promises another cycle of 10 years of prosperity - ominous as it abruptly stops after that. It seems we are now to accept that prosperity comes in boom and bust cycles. The speech gives rise to the notion that not just a rich few will prosper - well we would like to see how Brown delivers as in all this chaos and recession, the one sector that has lost little ground is the rich - in fact, most would say that they have fared far better. Sure they may get a few more taxes, but in the new decade the emphasis will be on the money men. Those that can manipulate the vast pool of money in the open markets will be the big winners as always, and they will pay proportionally less tax per pound they earn than anyone else in Britain.

That's my prediction for the new decade. The biggest losers will be those moderately well off who will be defenceless to the pounding of tax after tax - just as we were before but were too dumb to notice.

The problem with this limp message on growth is that after a year there is no detail. It is a strategy of hope. Effectively, our economic recovery strategy has ended with QE switching off shortly and VAT returning to the old high level this weekend. Scrappage is the last incentive left and that is limited to one industry. Deferred tax will be due soon and the hangover of mortgage holidays is yet to kick in - unemployment has yet to peak. Despite all this, the plan is to talk of growth and hope to God it arrives of its own accord.

Labour has a track record of 'head in the sand' governing - it's what got us into this mess as the warning signs about bubbles were clear to people on the ground. Now we are talking about 10 years of the same, led by the same people.

We must be really stupid. Then again, that's what Brown and Mandelson are betting on.

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