Leading article: A warning that needs to be heeded

Share
Related Topics

When he succeeded Gordon Brown as Chancellor of the Exchequer in 2007, Alistair Darling was expecting a relatively quiet time at the Treasury. In the event, he was plunged into the most severe financial crisis since the First World War. Yet Mr Darling came out of the nightmare with his reputation enhanced.

His 2008 prediction that the recession would be the worst in 60 years – which was initially rubbished – proved closer to the mark than those of other forecasters. The recapitalisation of the banks – in which Mr Darling had a major hand – stemmed the financial panic in Britain and was followed shortly after by other governments around world. His decision to cut the rate of VAT in order to support the economy was judged by the Institute for Fiscal Studies to have been an effective stimulus. But Mr Darling understood the need for medium-term budgetary discipline too. He fought a battle with Downing Street over the 2009 pre-Budget report, arguing that the former Government needed to do more to outline future spending cuts.

All that means Mr Darling's thoughts now on the economy and the banking system, which we report today, deserve a wide audience. Mr Darling knows the Treasury from the inside. So his view that officials there will be working on a "Plan B", to be used in the event that the economy crashes because of the Chancellor's ambitious deficit reduction strategy, is significant. It raises an important question: will Mr Osborne quash Treasury suggestions of an alternative fiscal course for his own political reasons?

Mr Darling's argument that the banking sector has not fully learned the lessons from the financial crisis – and that banks are still over-reliant on wholesale funding – is also accurate. This is intimately connected to the question of the sustainability of the national finances because it is doubtful whether the state could afford another banking crisis.

The Coalition will doubtless dismiss Mr Darling's intervention as the usual partisan Labour critique of its economic policy. But that would be a mistake. Mr Darling has been proven right too many times in the past for his warnings to be safely disregarded now.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Tradewind Recruitment: Science Teacher

£90 - £140 per day: Tradewind Recruitment: I am currently working in partnersh...

Tradewind Recruitment: Year 3 Primary Teacher

£100 - £150 per day: Tradewind Recruitment: Year 3 Teacher Birmingham Jan 2015...

Ashdown Group: Lead Web Developer (ASP.NET, C#) - City of London

£45000 - £50000 per annum + Excellent benefits: Ashdown Group: Lead Web Develo...

Tradewind Recruitment: Key Stage 2 Teacher Required in Grays

£21000 - £40000 per annum + Negotiable: Tradewind Recruitment: Key Stage 2 tea...

Day In a Page

Read Next
Kylie has helped to boost viewing figures for the talent show  

When an Aussie calls you a ‘bastard’, you know you’ve arrived

Howard Jacobson
The number of schools converting to academies in the primary sector has now overtaken those in the secondary sector – 2,299 to 1,884 (Getty)  

In its headlong rush to make a profit, our education system is in danger of ignoring its main purpose

Janet Street-Porter
Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee