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 You are in: Special Report: 1998: 11/98: Pre-Budget Speech  
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Pre-Budget Speech Thursday, 5 November, 1998, 08:30 GMT
Cheerful chancellor's upbeat message
Gordon Brown
Gordon Brown: Whipped a few rabbits out of the hat
By Political Correspondent Nick Assinder

Gloomy Gordon Brown transformed himself into the cheerful chancellor during his pre-budget statement as he moved to damp down the worst fears over the future of the economy.

He abandoned his normally dour approach for an unusually upbeat message which brought howls of scorn from the Tories and some quizzical looks even from his own side.

His overriding aim was to steady the nerves of his own party and reassure voters that things are not as bad as they had been painted.

He accepted there was a global economic slowdown which required him to virtually halve his growth forecasts for the year.

Good job

But he went on to announce much more optimistic forecasts for growth for the following years.

He also admitted that borrowing would have to increase to 4bn next year, compared to the 1.5bn repayment this year.

But he insisted the government had made such a good job of handling the economy so far that there was no need to cut his ambitious 40bn spending spree on health and education.

And he even whipped a couple of rabbits out of his hat with the announcement of an immediate 250m cash boost for the NHS to see it through the winter and another 250m to boost productivity through teenage training.

He echoed the message he had taken to cabinet in the morning that he was "steering a stable course for lasting stability" and - as is now traditional - he littered his speech with references to his "prudence" and "caution."

Nailed claim

For the most part, his optimistic statement delighted his own benches who claimed he had nailed the Tory claim that there was a 36bn black hole at the centre of his spending plans.

But he infuriated the opposition which immediately accused him of complacency and arrogance in the face of a looming recession.

Shadow Chancellor Francis Maude said he was operating "fantasy forecasting and Peter Pan economics" and tore into him for sitting on the front bench with a large grin on his face.

He said the Chancellors' forecasts were recklessly-optimistic and he had filled his black hole by upgrading his forecasts for growth.

There were even those on his own benches who were surprised at the optimistic tone of his speech with veteran left-winger Ken Livingstone pledging to "buy him a meal if he gets growth of over 1% next year."

Overly-optimistic

All eyes will now turn to the next meeting of the Bank of England's monetary committee to see if he has done enough to persuade them to cut interest rates.

More importantly for the chancellor's credibility, everything now rides on his forecasts proving right.

If, as some fear, he has been overly-optimistic in his forecasts in a bid to cover his short-term problems that will come back to haunt him in the very near future.

But, for the immediate future, he did enough to steady the horses and stop any panic spreading on his own benches.

Whether his position will be sustained by what happens in the real economy remains to be seen and might yet wipe the smile off his face.

Links to more Pre-Budget Speech stories are at the foot of the page.


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