Britannia Radio

Everything is perfectly under control

http://burningourmoney.blogspot.com/

Humongous deficits, sterling crises, emergency budgets, tax rises, strikes, and a weak divided government headed by a delusional Prime Minister with neither plan nor credibility.

It could well describe the coming winter. But it was actually the sick man of Europe swingin’ his way through sixties.

Poolside, Tyler has been reading Dominic Sandbrook’s White Heat, a lengthy but highly readable account of Britain under the hopeless Harold Wilson. And the parallels with Brown’s Britain leap off every page.

Particularly striking are the identical failures of leadership. Faced with huge economic challenges, Wilson shirked all the tough decisions until they were forced on him by events. Short-termist in the extreme, he never admitted his failures even when they were staring him – and everyone else – in the face.

Most notoriously, when - despite constant assurances to the contrary - he was finally forced to devalue the Pound in 1967, he went on TV and ludicrously asserted that the “Pound in your pocket” had somehow not been devalued.

It’s exactly how Brown would have played it – with the exception that Wilson was a rather more convincing liar. Plus, of course, Wilson had won two elections, and could therefore claim a legitimacy Brown has never had.

Elections or not, by 1968/69 Wilson was held in utter contempt. Not only the press and the electorate despised him, but his immediate colleagues thought him a waste of space. They spent years plotting behind his back, and after his abject failure to push though trade union reform (In Place of Strife), they very nearly summoned up the courage to knife him. Except of course they didn’t – just like today’s gutless cabinet, Jenkins et al never located the requisite balls.

But the real lesson from the 1964-70 Wilson government is not for Brown and Labour. It is for Dave and George when they take the helm next May.

Because Wilson’s biggest and most disastrous failure was not to grip the economic problems on Day One.

He’d inherited from the Tories an economy that was living well beyond its means, with a wholly unsustainable current account deficit. Yet instead of implementing the necessary deflation and fiscal discipline straight away, he tinkered around the edges, hoping the problem would somehow go away. Instead, the problems simply got worse, and the financial markets (or the Gnomes of Zurich, as Wilson unwisely dismissed them) took fright.

That loss of confidence compounded our problems hugely. It meant Wilson had to go cap in hand to the Americans for successive bailouts, and was ultimately forced to impose much bigger tax increases and spending cuts than would have been necessary had he acted straight off the bat.

Dave and George must not repeat that mistake. Everyone knows Britain is again living beyond its means. Everybody knows it cannot go on. And everybody is expecting decisive action after the election.

The financial markets will not be forgiving if there’s a Wilson-style wobble. And the price we will then have to pay for Brown’s economic fiasco will be even higher.

PS Well, it’s the end of June, and Mr and Mrs T are staying in a rather nice hotel looking out over the Med. Somebody’s got to do it, and normally at this time, such a hotel would be packed with affluent Germans. Not this year. Indeed, we reckon the hotel is only a quarter full. True, Peter Stringfellow is knocking around with a young lady who is presumably his grand-daughter, but there’s no disguising the general emptiness. The staff are putting a brave face on it, but we’re concerned: for them, the Spanish economy, and everyone else who has been living too high on the hog.