Stephen Foley: Ditching Brown looks crazy from here

American business leaders see a prime minister completely on top of his subject

How odd it looks, from this side of the Atlantic, that the British might be about to plunge a fatal knife into their prime minister.

Just a few weeks ago, Gordon Brown was corralling the rest of the world's leaders in the desperately complicated but desperately needed effort to re-shape global finance. Even today, the conversation here is about how Brown masterfully steered the UK away from catastrophe during last autumn's financial panic, in contrast to the confusion and interminable policy switches of two US administrations.

While the world is just tiptoeing out of this crisis, it looks simply perverse to ditch a leader who took his country unburned through that fire, and who is most engaged in the effort to prevent such a fire from igniting again.

Brown's alleged sluggish response to an expenses scandal that has not touched him personally and is only a few weeks old, his apparent inability to "connect" to the British people on a personal level – these things seem trivial compared to the great issues or failings that should bring down world leaders. It looks from here as if Britain is in the grip of a political anarchy.

It sounds from the headlines of the past few days that Brown would struggle to run the management committee of a church fete, let alone a cabinet and a major world government. But that was not what business and political leaders here saw when he was in New York and Washington in March, laying the groundwork for the G20 economic summit meeting.

Then we saw a man totally on top of his subject, capable of steering not just the UK economy but also the global financial system through the treacherous waters that must be crossed in the next few years. A breakfast audience of Wall Street bigwigs and political grandees expressed surprise not just at the depth of his analysis of what has gone so wrong with global capitalism, but with the number and sophistication of his ideas for reforming the international financial architecture.

There was no sign of the hesitations and sluggishness of which Brown stands accused back in the UK, where every last move of his now seems to be interpreted through that unfair prism.

The prime minister's second engagement that day – a discussion on "a new multilateralism for the 21st century" at New York University – was his own idea, marking him as a rare politician without "an allergy to complexity", according to his gushing host, John Sexton, the university's Chancellor. This is stuff that is easy to deride. If Brown is so much happier in the wonkosphere, why doesn't he go run Edinburgh University's economics department? More seriously, perhaps his talents would be better suited to the International Monetary Fund or the World Bank, where he can try to put his ideas into action.

But this is to miss the point. The critical economic and financial challenges facing Britain will be tackled precisely in this arena of international co-operation and in the global markets. At a moment when the country seems poised to ditch him, his expertise seems more invaluable than ever.

The G20 meeting was more than the usual talkfest. Economists here were impressed that it produced real money to stimulate global trade at what was then the darkest hour of the recession. It was not the "new Bretton Woods" that Brown dreamed about, but it kept up the pressure for the international cooperation needed if we are ever to end the imbalances in the global economy that underlie the financial meltdown and which haven't gone away. Similarly, if bankers are hemmed in by one country's rules, they will go elsewhere to make their mischief. This is stuff that cannot be done alone, and which must be done if the financial crisis is not to repeat and repeat in the coming years. With the immediate catastrophe averted, the pressure for this vital action will dissipate without leaders such as Brown.

It wasn't just Downing Street's spin machine that manufactured the notion that Brown was leading the world through the financial crisis last autumn. When the Bush administration was careening about trying to find a free-market solution to the implosion of free markets, Brown poured money into the worst-hit banks. Economists marvelled at the quick and clear-headedness of the British response, and the US followed within weeks. In the flavour-of-the-month phrase in US political debate, lawmakers insist that they "get it" and that their opponents "don't get it". On economic and financial matters, Brown simply "gets it".

Removing him is not just perverse. It looks a little dangerous, frankly. For a frenzied few minutes yesterday lunchtime, currency traders were seized by the notion that Brown was about to pre-empt his ouster by announcing his resignation, and the rumour sent the pound plunging. When Downing Street's response – "nonsense" – was flashed up on screens, things returned to normal. It's not that currency traders love Brown, per se. Partly, they just love exciting rumours. But mainly they hate uncertainty.

Financial markets matter – not a one-day wow in the currency market, of course, but over the long term. For all Western governments, which have had to empty the public purse to prop up the banking system and stimulate economic activity, financial markets matter a great deal. Britain, which could have the biggest budget deficit compared to the size of its economy next year and a government debt rising to its highest levels since the Second World War, retaining the confidence of financial markets is key to surviving the next decade without a disaster. If foreign investors won't buy British government debt, we won't be talking about cuts around the edges for public spending. There will have to be a wholesale re-think about what the government can provide in public services. It will be a very nasty decade.

There are very few politicians in the UK who are better placed than Gordon Brown to keep the confidence of financial markets. Certainly none of the candidates for prime minister in any party can match him.

The US has just ditched a dumb leader for a smart one. The UK looks from here as if it might be about to do the opposite.

s.foley@independent.co.uk