Brown's economic mismanagement comes home to roost
With news in the Telegraph this morning that household disposable income has fallen to its lowest in a decade, the economy is set to get worse. Brown's fabled skill at economic management, like so much of his carefully constructed reputation, is just so much spin.
Over the period 1992 - 2006 it's true that the UK GDP has grown by 49%, ahead of our mainland European competitors. But Canada on 59% growth, the US on 60%, Australia on 73% and Ireland on 137% all put our UK growth to shame. And because our growth has been fuelled in part by record immigration since the mid 1990s, per capita GDP growth has been much lower.
House price growth has fuelled consumption, and high public spending since 2000 has led to record public deficits. These are the pillars of Brown's 'economic competence'.
House prices are starting to fall. Public indebtedness is becoming increasingly unsustainable as interest rates creep up to ease the shock of the collapse of the sub-prime market. Immigration cannot continue at the record levels it has reached. Tomorrow's release of the CSR will have to rein in on public spending. In other words, all the factors Brown has relied on to fuel growth are collapsing.
Over the past few years Europe has been structurally reforming slowly and steadily; lower personal and corporate taxes, labour market reform, and a smaller share for the State in the national economy. Brown has been going in exactly the opposite direction, with the result that the UK is becoming increasing economically uncompetitive.
Brown's economy, reliant on immigration, rising house prices and high government spending, is on the point of implosion.