The Circus is Coming to Town

Yippee! We're all going to be famous! This Thursday, London will be the focus of the world's attention as the G20 leaders and their security personnel, spooks, economic and PR advisors and associated hangers-on fly into the capital for a conference at the ExCeL exhibitions centre.

Word has it that Brown's original plan was to use the event as the springboard for a successful June General Election. He hoped that the couple of weeks he's just spent flying around the world, meeting other leaders, lobbying for an enormous global fiscal stimulus plan, would have resulted in tacit approval for such a measure, which would then have been rubber-stamped and announced at a modern-day Bretton Woods in London's Docklands events venue. Next would have come the delayed Budget, with Opposition concerns about the scale of indebtedness created being drowned by praise for Brown's statesmanship, followed by an announcement that our unelected leader was going to the country.

Such a clever plan, Mr Brown, but for one thing: the US aside, much of the world, including the Governor of the Bank of England, steadfastly opposes further fiscal stimulus. Angela Merkel, Nicholas Sarkozy and others have refused to sign up to his plans. And if a minority of countries opt for the quick fix of a stimulus package, but others don't, those taking that option will find that it is of limited benefit, because export markets don't recover so fast as their domestic ones, transferring much of the benefit (but none of the debt, or future tax liability) elsewhere. And both fiscal stimulus and quantitative easing risk producing rampant inflation at a future date. Which may, just about, be acceptable if everyone's doing it, because it needn't devalue our currency relative to other nations'. But if we're going to be in a minority, possibly alongside only the US, then our competitiveness could be impaired for a generation.

Let's therefore hope that Brown's few friends among his fellow G20 leaders are generous enough to steer him away from any kind of bipartate action with the US. Brown should realise that, in this instance at least, our best interests are served by taking a lead from the European Union, which will take only prudent steps aimed at improving bank liquidity and improving regulation of financial institutions to avoid a repetition of recent history.

Looking at the public stances of Merkel, Sarkozy and some of the Eastern European heads of state, it seems unlikely that the EU was ever going to toe the Brown/Obama line in agreeing a huge, debt-fuelled stimulus package. But I'd like to think their minds were, if not changed, then strengthened, by one of the few moments of recent political debate so powerful and compelling that it captured the imaginations of millions of voters: the three-minute speech made by my local Euro MP, Daniel Hannan.

Delivered in Brown's presence (he was slouched over a table, and appeared to be doodling), it represented a concise, incisive condemnation of the Brown legacy. When, in decades to come, political historians attempt to summarise the strengths and weaknesses of Gordon Brown's premiership, as well as his record as Chancellor, they could do a lot worse than reproduce Hannan's speech verbatim, which is why I take the liberty of doing so here:

'Prime Minister, I see you’ve already mastered the essential craft of the European politician, namely the ability to say one thing in this chamber and a very different thing to your home electorate. You’ve spoken here about free trade, and amen to that. Who would have guessed, listening to you just now, that you were the author of the phrase ‘British jobs for British workers’ and that you have subsidised, where you have not nationalised outright, swathes of our economy, including the car industry and many of the banks? Perhaps you would have more moral authority in this house if your actions matched your words? Perhaps you would have more legitimacy in the councils of the world if the United Kingdom were not going into this recession in the worst condition of any G20 country?

'The truth, Prime Minister, is that you have run out of our money. The country as a whole is now in negative equity. Every British child is born owing around £20,000. Servicing the interest on that debt is going to cost more than educating the child. Now, once again today you try to spread the blame around; you spoke about an international recession, international crisis. Well, it is true that we are all sailing together into the squalls. But not every vessel in the convoy is in the same dilapidated condition. Other ships used the good years to caulk their hulls and clear their rigging; in other words – to pay off debt. But you used the good years to raise borrowing yet further. As a consequence, under your captaincy, our hull is pressed deep into the water line under the accumulated weight of your debt We are now running a deficit that touches 10% of GDP, an almost unbelievable figure. More than Pakistan, more than Hungary; countries where the IMF have already been called in. Now, it’s not that you’re not apologising; like everyone else I have long accepted that you’re pathologically incapable of accepting responsibility for these things. It’s that you’re carrying on, wilfully worsening our situation, wantonly spending what little we have left. Last year - in the last twelve months – a hundred thousand private sector jobs have been lost and yet you created thirty thousand public sector jobs.

'Prime Minister, you cannot carry on for ever squeezing the productive bit of the economy in order to fund an unprecedented engorgement of the unproductive bit. You cannot spend your way out of recession or borrow your way out of debt. And when you repeat, in that wooden and perfunctory way, that our situation is better than others, that we’re ‘well-placed to weather the storm’, I have to tell you that you sound like a Brezhnev-era apparatchik giving the party line. You know, and we know, and you know that we know that it’s nonsense! Everyone knows that Britain is worse off than any other country as we go into these hard times. The IMF has said so; the European Commission has said so; the markets have said so – which is why our currency has devalued by thirty percent. And soon the voters too will get their chance to say so. They can see what the markets have already seen: that you are the devalued Prime Minister of a devalued government.'