State of the nation: So, Tony, on a scale of one to ten, how does your government rate? Economy: 8/10

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1. Inflation target of 2.5 per cent with Bank of England setting interest rates; inflation rate and cost of borrowing at lowest in 30 years.

2. Government borrowing reduced so that public sector borrows only to invest.

3. Unemployment rate at 19-year low, some reduction in long-term joblessness. Aim is to reduce "structural" unemployment further through New Deal and welfare reform.

4. Improve productivity and competitiveness after many years lagging behind other advanced economies.

5. Foster entrepreneurship and investment to boost long-term growth rate.


Gordon Brown got off to a flying start with his surprise announcement of operational independence for the Bank of England. His fiscal policies have also been tough, pleasing the City, and yet redistributive. The payoff to sound macroeconomic policies: the lowest mortgage rates since the late Sixties and the lowest unemployment since the late Seventies. The drawback is a strong pound, but this is largely beyond Mr Brown's control.

More difficult to achieve will be the Government's ambitions on the structure or supply side of the economy. Every government wants to boost entrepreneurship, but results are bound to be slow, and there is a danger in raising expectations too far. The Government also needs to own up to trade-offs, like the conflict between improving job protection and cutting red tape for business. So far it has been re-regulating, not de-regulating.