Letter: Clarke's sound legacy to Brown

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Clarke's sound legacy to Brown

Sir: So Gordon Brown thinks that his predecessor's economic assumptions, set out in last year'sBudget Red Book, may have been too optimistic. He has asked the Comptroller and Auditor General to review them to see if "the books were cooked by the Tories" ("Treasury ordered to open its books", 20 May).

The fact is, however, that two of Kenneth Clarke's central forecasts have already proved overly cautious. First, the budget deficit for 1996- 97 has come in pounds 3.4bn lower than Mr Clarke's pounds 26.5bn prediction (which was in turn a more optimistic forecast than the Treasury's own internal view at the time). The PSBR for the current year now shows every sign of continuing to close more rapidly than expected.

Second, unemployment was predicted to fall to 1.6 million within three years, but has actually done so in six months.

As to the suggestion you report that the 2.5 per cent trend rate of growth assumed in the Budget cannot be sustained "over the rest of the 1990s", of course only time will tell. However, the Red Book makes it clear that this assumption is "similar to the average growth rate achieved over the postwar period". The average of the GDP growth predictions by the panel of independent forecasters, at the time of the last Budget, was 3.4 , 3.0 and 2.6 per cent for the three calendar years 1997-99. So the then Chancellor's forecast can hardly be described as wildly out of line with orthodox opinion.

As Shadow Chancellor, Mr Brown's own predictions - over the future path of unemployment and inflation, for example - proved consistently inaccurate. As Chancellor, let us hope his own track record does not fall foul of future audits by the Comptroller and Auditor General.


London SW3

The writer was special adviser to the Chancellor of the Exchequer, 1996- 97