What should really worry the Tories ...

David Cameron’s advisors may be seeking this morning to protect him from the further rumblings of the Corfu affair or the attempt by the Independent to embroil the Tory leader in a ‘scandal’ of his own. But if I were them I would be much more worried by the combination of the pieces in the Guardian by LibDem MP Chris Huhne and in the FT by Samuel Brittan, doyen of economic commentators.  

Brittan joins a number of other commentators in saying that, given the improbability of rising inflation in a global slowdown, it is not only reasonable but advisable for the Government to allow an increase in the public deficit:

‘the obvious temptation is to allow too much money to be created and to end up with rapid inflation and no lasting gain to output or jobs. But faced with the risk of a severe slump, when men and women who could be working are left needlessly idle, conventional wisdom needs to be stood on its head as the danger is of too little spending’

Brittan goes on to argue that this would have been the view not only of JM Keynes but also of Milton Friedman.

Huhne berates the Conservatives for alarmism about public borrowing. Citing several examples of Cameron’s claims that the public finances are in crisis, Huhne argues:

‘in reality, the government has substantial leeway to help maintain activity. The UK is better positioned to use fiscal policy to stabilise output than at the onset of the 1973 or 1979 recessions….It is frankly irresponsible of the Tories to pretend otherwise’.

The problem for the Conservatives is not just that a well respected economist is dismissing alarmism or that the third party is turning its guns on the Opposition when the Government is itself such an easy target. The political danger lies in Huhne’s closing line

‘the Tories should not be talking Britain down’

This allegation is uncomfortably similar to the charge put explicitly by Labour and implicitly by Boris Johnson against the Tories ‘broken society’ campaign. There too critics argued that the Conservatives were willing to run the country down to make political capital.

None of which is to say that Labour can simply sit back and keep spending. As I will be arguing on this weekend’s Politics Show, while Brittan, Huhne (and Darling) are right about the justification for extra borrowings, Labour needs to be bold about re-ordering spending priorities towards measures that can tackle and alleviate recession rather than other commendable but now hard-to-justify aspirations.

• John Green - 25 Oct 2008 4:54pm

  Talking the UK down is a temptation Tories and their press supporters find difficult to resist. I recall a visit to Norway when Harold Wilson was PM and the chap I was concerned that well-heeled Brits of his acquaintance were discouraging him from buying British because of widespread industrial unrest, particularly in the docks. True that there were problems at the time in the London docks but he construction components he wanted to import came through Felixstowe.

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