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Wednesday, 27 November, 2002, 20:48 GMT
Brown's economic alibi
Evan Davis

"Phew", the chancellor must be saying tonight.

He got the bad news out of the way with only a knock to his reputation, rather than a terminal blow.

Here's how he did it: he had an alibi; he avoided the difficult decisions; and he made some heroic assumptions.


It all sounds like a miraculous escape and there is a very good chance he will get away with it.

First the alibi. He had to admit his borrowing was jumping but it was not his fault, it was the global economy and the turbulent financial markets.

On his figures, half the extra borrowing is accounted for by plummeting tax revenues from financial institutions, which are making less money than he expected.

Second, avoiding difficult decisions. There are no new taxes, except some new anti-tax avoidance measures, and he is not cutting his spending plans either. He borrows his way out of trouble.

Third, those heroic assumptions. Gordon Brown is predicting the economy will perform pretty well next year.

Two-year blip?

On his forecast, growth next year will be 2.5% and the lop-sided nature of that growth will subside.

Manufacturing will recover and consumers will do the decent thing and rein in their spending.

Fair enough. But he is also predicting better growth in later years.

In short, in this pre-Budget report the problems he has admitted to today are nothing more than a two-year blip.

It all sounds like a miraculous escape and there is a very good chance he will get away with it.

But it is still a gamble. He got it wrong this year and he cannot afford to do so very often in the future.


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