The Hindu : Opinion / News Analysis : Dilemma of Blair's heir apparent

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Thursday, May 12, 2005

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Opinion - News Analysis

Dilemma of Blair's heir apparent

William Keegan

As long as the British economy doesn't go into recession, the prospects of Finance Minister Gordon Brown as Tony Blair's heir apparent look good. But it may not do to leave things too long.

GORDON BROWN, the British Chancellor of the Exchequer (Finance Minister), has often joked that "there are two kinds of chancellor: those who fail, and those who get out in time."

He will have had in mind not only his Labour predecessors, such as James Callaghan in 1964-67, and Denis Healey (1974-79), both of whom faced serious currency crises that tarnished their period in office. There was also the more recent example of Nigel Lawson, Chancellor under Margaret Thatcher from 1983 to 1989, who was for a while feted as having performed "an economic miracle" but whose "boom" turned to "bust" and who saw his reputation badly scarred.

Mr. Brown has been Chancellor of the Exchequer since May 1997, and is already in the record books as the longest-serving British Finance Minister since Nicholas Vansittart (1812-23). He too has been widely feted for presiding over happy years of reasonable economic growth, high employment and low inflation.

Enviable record

His record and reputation made an essential contribution to the Labour Party's election victory last week. Indeed, so important was Mr. Brown considered to be that he had to be brought back to the centre of the campaign after Tony Blair had sidelined him and tried to go it alone. The early part of the Labour campaign was disastrous, but picked up as soon as Mr. Brown was invited back to support the Prime Minister.

What both the campaign and the election itself showed only too clearly was that Mr. Blair had been badly tarnished by joining George W. Bush in the invasion of Iraq, and there were many voters for whom the election became a referendum on Mr. Blair himself.

When calling the Chancellor back, Mr. Blair assured him that, contrary to his original intention, he would not move Mr. Brown from the Treasury to the Foreign Office after a victorious election. Mr. Brown would not have been prepared to move, because, as the country knows to its cost, Mr. Blair has been his own foreign secretary, with disastrous consequences. Moreover the Blair camp had widely advertised the plan as a demotion and an intended insult to Mr. Brown.

So here we are, with Mr. Blair re-elected with a much-reduced majority, and very diminished authority. Indeed, the scene in the corridors of power is quite remarkable, with most people believing Mr. Blair's prime ministerial days are numbered, and the courtiers already behaving as though the man with the real power is Mr. Brown.

Some commentators are saying that Mr. Brown, who has been agitating for years to "take over" the premiership, might not wish to do so before a referendum on the European Treaty, expected next year. But if Mr. Brown really wants to wait so long, one must begin to wonder whether, as a number of sceptics believe, he is ever going to get that much-coveted job.

He ought already to have learned how reputations can change. After all, he was the leading contender to succeed the Labour leader John Smith in the early 1990s, but at the time of Smith's untimely death, Mr. Blair had pulled ahead in the popularity stakes. There are undoubtedly those who ask whether Mr. Brown, for all his ambition, really has the killer instinct.

Now, after such a successful period for the economy, the big question is whether, if Mr. Blair is not forced out sooner rather than later, something might go wrong on the economic front and Mr. Brown's reputation might suffer. For there can be little doubt that Mr. Brown would be elected leader by the Labour Party if the vacancy arose soon.

As one who has covered the U.K. economic scene for many years, I wonder how long the good news can continue.

History suggests that it cannot go on like this, and certainly there has been a sharp slowdown in the growth of consumer spending as people's incomes have been hit by higher taxes and interest rates, and the impact of the end of the house-price boom on their sense of well-being.

Moreover the news seems to get gloomier and gloomier from the eurozone, which is by far the U.K.'s biggest export market.

Economic scene

Nevertheless, the news from the Bank of England has been far from discouraging from Mr. Brown's point of view. At his quarterly press conference on the bank's inflation report, Governor Mervyn King painted a remarkably sanguine view of the outlook for the economy over the next year or so. As usual, Mr. King emphasised that the outlook was full of uncertainties, and he certainly did not expect the growth of consumer spending to recover to the hectic pace of recent years.

But he saw a recovery, and seemed less concerned about the so-called "black holes" in the government finances than many outside commentators. In the past, recessions in the U.K. have usually been caused by panic measures aimed at curbing an acceleration in inflation. The Bank does not seem to be worried, although it is careful to point to the usual caveats.

So Mr. Brown's luck may stay with him. But, personally, in his shoes I should like to move on as soon as possible.

- Guardian Newspapers Limited 2005

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