Outlook: A new hole for Geoffrey Robinson

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If there was a motto pinned above Geoffrey Robinson's desk it would read "When in a hole, stop digging" since the more the Paymaster General tries to explain away his offshore trusts the deeper into the mire he seems to get. Yesterday, however, he put his personal travails to one side to help excavate his Government from a different sort of hole. This particular one is black and has been created by someone else who knows a lot about digging, Richard Budge of RJB Mining.

The idea that the Paymaster General can reverse the long-term decline of the coal industry by inviting Mr Budge into his office along with the chief executives of the three big generators and banging a few heads belongs in fantasy land.

But it is what passes these days for Labour's energy policy. Until the Department of Trade and Industry decides what to do with all those applications for gas-fired stations, the bulge in the pipeline will get bigger and we will have policy on the hoof.

From a very New Labour attitude of benign neglect a matter of weeks ago the Government now believes it has an historic role to play as defender of the coal industry and saviour of miners' jobs, certainly at least this side of Christmas.

Quite why a member of the Treasury team has been selected for this task when the Government already has an energy minister and keeps insisting there is no question of throwing money at the pits is a minor mystery. But it probably has something to do with Mr Robinson's "can do" image as a businessman first and a politician second.

This is hardly the first time New Labour has displayed its quaint but naive faith in the ways of the business world. It has already been beguiled on several occasions. Need to lend some respectability to the welfare to work programme? Then get the man from the Pru to call. Need to bring some intellectual rigour to the tax and benefit review? Then bring on Martin "two brains" Taylor from Barclays Bank.

As Mr Robinson has demonstrated, however, businessmen are mere mortals too. The offshore trusts affair is certainly an embarrassment but thus far it is hard to pin much more on the Paymaster General than a charge of hypocrisy. Squirrelling millions away from the taxman while penalising those whose savings exceed pounds 50,000 is poor politics. There again, propping up the pits while denying launch aid for Airbus (another Robinson decision) looks like poor business.

The lesson is that businessmen and politics do not always mix, even for those invited into Labour's gilded inner circle. It will take a few more embarrassing episodes to drive home the message. Mr Taylor could provide the next one if he decides to buy NatWest and take several thousand bank workers out of the tax system and on to unemployment benefits.

At last, a useful corrective to the fashion for predicting that Asia's financial meltdown spells doom for the rest of the world. It spells, if not doom then possibly recession for Asia, say the cool heads at the OECD. For the rest, the crisis comes as a rather useful counterweight to the danger of overheating. Certainly, the sharp slowdown in South-east Asia will slow exports from the rest of the world and worsen the European and US trade position. But there need be next to no impact on growth and inflation as long as central banks adjust interest rates appropriately.

Does this rather contrarian view in the semi-annual Economic Outlook make sense? On the evidence so far, yes. The Federal Reserve has already held off raising US interest rates when many analysts expected an increase, and it is likely to leave rates unchanged when it meets again today. As indicator after indicator of domestic inflationary pressure starts to flash red, this can only be a reaction to the potential spillover from Asia.

There is also a growing sentiment that the Bank of England will not increase UK rates any further - a view shared by the OECD, which sees Britain coming in for a soft landing. The Bank's Monetary Policy Committee appears to be waiting for firmer evidence on the export front, which is where the first symptoms of "Asian flu" afflicting the British economy would manifest themselves.

The view that collateral damage on the rest of the world would be limited got several further boost yesterday from within Asia. Korea said it would allow its currency to float, which traders said would get the pain of devaluation over quickly and allow the won to stabilise, rather than dragging out the decline over several more weeks or months. A package of tax-cuts started to take shape in Japan, with details due today. Even Mahathir Mohamad, the motormouth Malaysian Prime Minister, admitted that the Asian countries had made some economic policy mistakes.

He, and other Asean leaders, still criticised the West for not doing enough to help sort out the crisis. No thanks there for the near-$100bn in emergency credit arranged for South-east Asia in the space of five months. But the assorted grumblers ought to be even more grateful that the Fed and other central banks are not maniacs for financial orthodoxy at all costs, as they are so often portrayed.

This is not to say that there is no danger of the financial meltdown worsening, getting beyond the control of the central bank firefighters. Of course catastrophe is possible. It is just not the most probable outlook.

Meanwhile a bit of evidence at last that it is not all doom and gloom in the Far East. Acer's decision to press ahead with its computer plant in South Wales demonstrates that the Taiwanese economy, at least, is not suffering from quite the same Asian flu that has infected the rest of the region.

Unfortunately, the battle to bring Acer to these shores has brought on a nasty outbreak of that well-documented British disease otherwise known as inward investmentitis. In its most virulent form, competing regions of the country outbid one another for foreign manufacturing projects so extravagantly that it leaves the taxpayer nursing a very painful hole in his wallet.

The illness is said to be endemic in the valleys, nor does it appear to discriminate between political parties. William Hague contracted a Korean dose of it when he was running the show and persuaded Lucky Goldstar to set up in the principality.

Now Ron Davies, Labour's Welsh Secretary, seems to have contracted a strain from Taipei, if his envious competitors in the North East are to be believed.

We have not been told how much the Welsh Development Agency is paying to get Acer and its jobs into Cardiff but we do know that it is building the factory and the access roads for them and providing some training money.

Outbreaks of this sort were supposed to have been a thing of the past now that the Prime Minister has given Margaret Beckett the overall responsibility for vetting and co-ordinating bids for inward investment projects.

However, having got the antidote she seems to have gone all squeamish about inserting the needle. Come on nurse. Temperatures are getting dangerously high here.