Peter Jackson column

Oct 20 2005 By Peter Jackson, The Journal

Gordon Brown could be forgiven for thinking that the Fates are conspiring against him.

Instead of being in 10 Downing Street, he finds himself still stuck at the Treasury as economic pundits far and wide claim to be able to hear the approaching flapping of chickens coming home to roost.

The Ernst & Young Item Club, which uses the Treasury's own economic model to predict the national economy, forecasts growth of just 1.6% this year, against the Chancellor's Budget prediction of 3% to 3.5%.

It also says this was predictable last year but Prudence took a back seat to vulgar electoral calculations. And, just for good measure, the club adds that it's wrong to blame the UK's economic slowdown on oil prices or the weak European economy.

Which is undoubtedly true, but it's doubly cruel of them to mention them, for while oil prices and the weak European economy don't provide Gordon Brown with an alibi, they do give him two additional headaches.

This is because both make it difficult for the UK economy to bounce back more quickly than forecasters predict and to grow at a sufficient rate to plug the projected £10bn black hole in the public finances.

The oil price shows little sign of coming down appreciably, at least not while the markets are poring nervously over every storm warning in the Mid-Atlantic, in case it turns out to be another Katrina.

As for Europe, the German election result probably represents the worst possible outcome for Gordon Brown. The close result means new Chancellor Angela Merkel can claim no mandate for much-needed but controversial economic reforms.

Also, even if she were minded to play the Iron Lady and drive the reforms through, her SPD coalition partners are unlikely to let her. This is bad for the European economy, bad for the UK and bad for Gordon Brown.

Back in January I wrote: "...it means a less rosy economic outlook for 2006. In fact, perhaps the worst thing Tony Blair could do to Gordon Brown after the election is leave him at the Treasury to take the flak".

I might be feeling smug but for the fact that, first, Gordon Brown is a much cleverer man than I, and, second, he has an impressive record of confounding his critics and being proved right.