Leading Article: We're not all doomed, Mr Darling

Share
Related Topics

We think that we know what Alistair Darling, the Chancellor, thought he was saying. The way that he said it, however, has undermined economic confidence and further weakened the Prime Minister. In his newspaper interview yesterday, and even in his attempt to clarify it on television later, Mr Darling sounded more apocalyptic than he intended.

He told The Guardian that we are facing economic times that "are arguably the worst they've been in 60 years". This was a remarkable assessment, not least because, on the face of it, it was untrue. Was he saying that current forecasts are for conditions worse than the three-day week in 1974, the high inflation of 1974-80, or the mass unemployment of the early 1980s? Even the most pessimistic member of the Bank of England's committee, David Blanchflower, who last week predicted 330,000 job losses by Christmas, does not seem to be suggesting anything of that order.

As Sean O'Grady, economics editor of The Independent, explains on page 6, the Chancellor may have had a specific aspect of the economic situation in mind. The drying-up of credit in the global banking system is something that has not happened on such a scale since it became possible, after the Second World War, to speak of an international capital market. It is much bigger than the secondary banking crisis that hit the City of London in 1973-4 and, although its effects on the "real" economy have so far been limited, it does have the potential to cause a global slump that really would be serious.

So far, however, even Professor Blanchflower is predicting "only" a recession. That may mean hardship for many, but it was hubris for this Government to have proclaimed the end to boom and bust. There will always be economic cycles, and in many ways it is healthy for the over-borrowing of the past decade to unwind a little.

Even in his clarification, Mr Darling failed to make the distinction clear between a "profound downturn" and a "credit crunch the like of which we haven't seen for generations". The trouble is that, as he should know, "credit crunch" has become lazy shorthand for "a period of economic stringency". In fact, it means that banks find it difficult to borrow from each other. It may contribute to recession, but the extent to which it does depends crucially on confidence. Which is why his words were so damaging.

Unless he makes clear that his "worst in 60 years" comment applied to the state of the banking system, rather than directly to living standards, people will wonder if he knows something that they do not. Most people are realistic enough to accept that a period of slow or negative growth may be a price to be paid for the good years of 1993-2007. But they are not expecting a return to the three-day week.

In many respects, as Mr Darling tried to "clarify", the fundamentals of the British and world economy are sound. US growth has bounced back; China and India continue to lift the rest of the world; the oil price has subsided. Mr Darling may have thought that he was engaged in expectations management. And it is true that Gordon Brown's upbeat assessments of Britain's economic prospect had started to ring false. But there is a happy medium between optimistic bluster and proclaiming, like Private Fraser, that "we're all doomed".

A Chancellor of the Exchequer needs to be sensitive to the effects of his or her every word on economic confidence. It is surprising that Mr Darling should have resorted to playing political games with such important matters. As we report today, it appears that he had not told Mr Brown about the interview. It looks like an attempt to prepare the public for bad economic news, to secure his own position and to distance himself from the Prime Minister. Probably unintentionally, he allowed some of his frustration to show at having to take the sharp end of Mr Brown's mistakes, from the 10p tax fiasco to the summer briefing about a stamp duty holiday.

In that respect, the interview was a significant manifestation of a Government core close to meltdown. The relationship between Nos 10 and 11 is plainly dysfunctional already. It took years for that to happen in the case of Margaret Thatcher and Nigel Lawson, and even Tony Blair and Mr Brown managed to keep it together, just about, until the final two years. Another sign of turmoil at the heart of Government, as we also report, is the imminent departure of Stephen Carter, who has luxuriated in the grand title of Chief of Strategy and Principal Adviser to the Prime Minister for less than a year. The auguries for the efficient despatch of the nation's business are not good.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Solutions Architect - Permanent - London - £70k DOE

£60000 - £70000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

General Cover Teacher

£110 - £130 per day: Randstad Education Reading: Great opportunities for Cover...

Maths Teacher

£110 - £130 per day: Randstad Education Reading: QTS Maths Teachers needed for...

Maths Teacher

£110 - £130 per day: Randstad Education Reading: QTS Maths Teachers needed for...

Day In a Page

Read Next
The bustling Accident & Emergency ward at Milton Keynes Hospital  

The NHS needs the courage to 'adapt and survive'

Nigel Edwards
 

Letter from the Sub-Editor: Canada is seen as a peaceful nation, but violent crime isn’t as rare as you might think

Jeffrey Simpson
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

'Renée Zellweger's real crime was to age'

The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

Disney plans live-action remakes of animated classics

From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
Thousands of teenagers to visit battlefields of the First World War in new Government scheme

Pupils to visit First World War battlefields

A new Government scheme aims to bring the the horrors of the conflict to life over the next five years
The 10 best smartphone accessories

Make the most of your mobile: 10 best smartphone accessories

Try these add-ons for everything from secret charging to making sure you never lose your keys again
Mario Balotelli substituted at half-time against Real Madrid: Was this shirt swapping the real reason?

Liverpool v Real Madrid

Mario Balotelli substituted at half-time. Was shirt swapping the real reason?
West Indies tour of India: Hurricane set to sweep Windies into the shadows

Hurricane set to sweep Windies into the shadows

Decision to pull out of India tour leaves the WICB fighting for its existence with an off-field storm building
Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?