Pre-Budget Statement: If this goes on, we'll be richer than Germany by 2020

BEING THE Chancellor is a great job in boom times. You can boast of the progress of the economy. You can luxuriate in the delights of a budget surplus. You can promise millions of spending on pet projects, all at no apparent additional cost to the taxpayer. And all the while you can still play the responsible, earnest, socially-aware son-of-the- manse. Wow.

Gordon Brown yesterday played each of those roles in turn: the economic overlord, the prudent money-counter and the beady-eyed Santa Claus, giving snippets of good news on each area. That he could do so is thanks to three things, only the last of which is down to him: the structural changes that took place in the British economy under the previous government; the long period of decent global growth and stable UK economic policies over the last two years. But that last point deserves all credit: Mr Brown has earned his moment in the sun.

The economic story has two newish elements. The first, which we pretty much knew, is that growth prospects both this year and next look better than they did even six months ago. Those of us who felt that the Treasury's forecasts were over-optimistic last year have been proved wrong: score one for the Whitehall mandarins, zero for the City scribblers.

The second element, which some of us pretty much hoped for and which, if true, is more important than the first, is the hint that the long- term growth potential of the economy may have risen. The Treasury assumption seems to be that the economy can grow at 2.5 per cent, not 2.25 per cent. Now, a quarter of a percentage point may not seem much, but over a couple of decades it is of enormous importance. If this is right, it is perfectly possible that Britain will be richer than France or Germany by 2020, for it has already narrowed the gap in the last eight years.

To do that means believing not just the Treasury numbers but also Mr Brown's vision of the enterprise culture which he repeatedly asserted the government sought to nurture and support. It is too early to make any judgement on the series of detailed measures that he announced to support entrepreneurship - remember how there is a particularly wide gulf between what Mr Brown says and what he actually does - but the rhetoric is interesting and encouraging.

Role two is the careful accountant, the holder of the nation's finances. The new information is the size of the projected surpluses. The simple point here is that if you have faster-than-expected growth you get faster- than-expected rises in tax revenues. Mr Brown tweaked up the tax take by a series of apparently insignificant measures which often ran counter to his stated intentions. Good example: increasing taxation on pension funds. But the thing that has made all the numbers turn out so rosy has been very good growth.

Sure we have a budget surplus. But so does the US, Canada, Australia, Ireland - all English-speaking economies that have done well over the last seven or eight years. France, Germany and Italy all have deficits because they have grown more slowly. Get growth and public finances come right. Falter and they go wrong. What growth also does is give a war chest for public spending ahead of the next general election. He says he won't spend to excess? He won't need to, for there is so much in the pot that a few hundred millions here and few there can be spent on politically- effective projects (like free TV for the elderly) without making much of a dent on the cash pile.

And role three, the Santa Claus act? It really is like a visit to a department store Santa. The gifts handed out are relatively cheap to make. They are (from the point of view of the child) free. But the theatre of the Grotto is enough to make the kids keep coming. Oh yes, and remember to say thanks to Santa, too. Ho, ho, ho.

That whole exercise in distributing bits of public money sounds wonderful. Lots of tiny little projects: presents for entrepreneurs; presents for home parents; presents for IT training; presents for the voluntary bodies, presented in fact for all the well-behaved. And then there are the punishments for the naughty, the "entrepreneurs" in the informal economy, the smokers, the smugglers, the monopolists. No presents for them - they get the task- force waving the cane.

There is nothing wrong with all this. What we are seeing is a mixture of competent governance and clever politics, both benefiting from the strong following wind of a successful economy. It is exactly the same phenomenon that the US administration is experiencing - or indeed the governments of any democracy that is growing reasonably swiftly. To see the reverse look at Germany or Japan, where people are not getting much richer, where unemployment is getting worse (or at least not getting significantly better) and where the poor old finance minister catches it in the neck.

To say that is not to play down the economic weaknesses correctly identified by the Chancellor. There is a lot to be done, in particular to pull up the parts of the economy that are still below global good practice. When most things seem to be going well is absolutely the right time to tackle the ones that are not. But remember, Mr Brown, that you have been dealt a great hand. Enjoy playing it; and don't you dare muck it up.

Voices
voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
Sport
The Pipes and Drums of The Scottish Regiments perform during the Opening Ceremony for the Glasgow 2014 Commonwealth Games at Celtic Park on July 23, 2014 in Glasgow, Scotland.
Commonwealth GamesThe actor encouraged the one billion viewers of the event to donate to the children's charity
Sport
Karen Dunbar performs
Entertainers showcase local wit, talent and irrepressible spirit
Sport
Members of the Scotland deleagtion walk past during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
film
Life and Style
fashion Designs are part of feminist art project by a British student
News
Very tasty: Vladimir Putin dining alone, perhaps sensibly
news
Life and Style
Listen here: Apple EarPods offer an alternative
techAre custom, 3D printed earbuds the solution?
Arts and Entertainment
Top guns: Cole advised the makers of Second World War film Fury, starring Brad Pitt
filmLt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a uniform
News
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
News
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
Arts and Entertainment
A scene from Shakespeare in Love at the Noel Coward Theatre
theatreReview: Shakespeare in Love has moments of sheer stage poetry mixed with effervescent fun
News
Joining forces: young British men feature in an Isis video in which they urge Islamists in the West to join them in Iraq and Syria
newsWill the young Britons fighting in Syria be allowed to return home and resume their lives?
Arts and Entertainment
The nomination of 'The Wake' by Paul Kingsnorth has caused a stir
books
News
i100
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

BI Manager - £50,000

£49000 - £55000 per annum + competitive: Progressive Recruitment: My client is...

BI Project Manager - £48,000 - £54,000 - Midlands

£48000 - £54000 per annum + Benefits package: Progressive Recruitment: My clie...

VB.Net Developer

£35000 - £45000 per annum + competitive: Progressive Recruitment: If you're pa...

SAP Business Consultant (SD, MM and FICO), £55,000, Wakefield

£45000 - £55000 per annum + competitive: Progressive Recruitment: SAP Business...

Day In a Page

Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform
Climate change threatens to make the antarctic fur seal extinct

Take a good look while you can

How climate change could wipe out this seal
Should emergency hospital weddings be made easier for the terminally ill?

Farewell, my lovely

Should emergency hospital weddings be made easier?
Man Booker Prize 2014 longlist: Crowdfunded novel nominated for first time

Crowdfunded novel nominated for Booker Prize

Paul Kingsnorth's 'The Wake' is in contention for the prestigious award
Vladimir Putin employs a full-time food taster to ensure his meals aren't poisoned

Vladimir Putin employs a full-time food taster

John Walsh salutes those brave souls who have, throughout history, put their knives on the line
Tour de France effect brings Hollywood blockbusters to Yorkshire

Tour de France effect brings Hollywood blockbusters to Yorkshire

A $25m thriller starring Sam Worthington to be made in God's Own Country
Will The Minerva Project - the first 'elite' American university to be launched in a century - change the face of higher learning?

Will The Minerva Project change the face of higher learning?

The university has no lecture halls, no debating societies, no sports teams and no fraternities. Instead, the 33 students who have made the cut at Minerva, will travel the world and change the face of higher learning
The 10 best pedicure products

Feet treat: 10 best pedicure products

Bags packed and all prepped for holidays, but feet in a state? Get them flip-flop-ready with our pick of the items for a DIY treatment
Commonwealth Games 2014: Great Scots! Planes and pipers welcome in Glasgow's Games

Commonwealth Games 2014

Great Scots! Planes and pipers welcome in Glasgow's Games
Jack Pitt-Brooke: Manchester City and Patrick Vieira make the right stand on racism

Jack Pitt-Brooke

Manchester City and Patrick Vieira make the right stand on racism
How Terry Newton tragedy made iron men seek help to tackle their psychological demons

How Newton tragedy made iron men seek help to tackle their psychological demons

Over a hundred rugby league players have contacted clinic to deal with mental challenges of game