Andrew Grice: The Week in Politics

Forget donors, only the economy matters

When Gordon Brown met a group of junior and middle-ranking ministers for one of his regular chats with them on Wednesday, there was agreement that the Government is swimming against a tide of "anti-politics" in the country. Ministers agreed the problem had been made worse by Labour's dodgy donations. Mr Brown acknowledged that this saga could drag on for months.

His guests were, for the most part, on their best behaviour. Yet, in talking to ministers recently, I have been struck by their concerns, which go much deeper than events such as "Datagate" and "Donorgate". Several are saying sotto voce that the Government is in danger of becoming dysfunctional.

"What's going on inside the Government is much worse than what's happening to it from the outside," one told me starkly. Common complaints are that Mr Brown is trying to do too much; that all decisions have to be rubber-stamped by him, which causes logjams (at best) or paralysis (at worst); that some of the advisers he brought with him from the Treasury lack the experience to run a government machine ("what they really need is someone over 50," said one cabinet minister); that Mr Brown is such a dominant and respected figure that aides are reluctant to challenge him and that he is too dependent on his tight, inner circle of Ed Balls, Ed Miliband andDouglas Alexander.

Other ministers say this trio can't possibly run the country because they also have departments to run. According to the Whitehall grapevine, Mr Brown is leaning more than ever on Mr Balls because Mr Alexander, Labour's election co-ordinator, is in the doghouse for not co-ordinating the farcical non-election at all.

There is another side to this story. Ministers are pleased that Mr Brown, true to his word, has restored proper cabinet discussions and decisions are being taken by cabinet committees rather on Tony Blair's sofa. All the same, the danger signals are coming from loyal ministers not malcontents or the usual Blairite suspects. They should be flashing red on the No 10 radar. Perhaps the ministers themselves should be a little more candid when Mr Brown calls them in for a chat.

The other worry on ministers' minds is not Datagate or Donorgate but the state of the economy. True, the Bank of England's decision on Thursday to start cutting interest rates came as a relief as it could have gone either way. But all the signs are that 2008 will be the most difficult for the economy since Labour came to power.

When he was at the Treasury, Mr Brown used to joke that there were "two types of chancellor those who fail and those who get out in time." Although he got out, his past may be about to catch up with him, if the economic forecasters are to be believed.

The Tories sense a golden opportunity to find a chink in Mr Brown's best suit of armour. It was significant that David Cameron launched his strongest attack on the Prime Minister's handling of the economy on Thursday. The Tories have learnt to tread carefully when trying to undermine Mr Brown's economic credentials. They have had egg of their face after warning about downturns that didn't materialise, and Mr Brown has repeatedly defied City predictions that his growth forecastswouldn't stack up.

But the global economy, and America's problems in particular, mean that Britain is almost certainly going to catch a cold. It is likely to be persistent and ministers are already talking about delaying the election to 2010 to allow the economy to bounce back, even if Labour's other ills are cured.

There is a chance that the economy will prove the tipping point from which the Brown government cannot recover. Incompetence and sleaze are bad enough, but there is time for Labour to recover if lessons are learnt. The economy is different. Labour MPs are eyeing the housing market with trepidation. Many won their seats in 1997 on the back of negative equity and shiver at the prospect of their constituents watching the value of their homes dramtically slump.

It hasn't been widely noticed, but Mr Brown, like Mr Cameron, has adjusted his language on the economy. The triumphalist tone of his Budget statements has given way to talk about the tough and unpopular decisions needed to meet the long-term challenges facing the country. In part, this is an insurance policy against difficult economic times.

Brownites insist their man would relish a bare-knuckle fight with Mr Cameron over the economy. Their confidence is partly based on their belief that, if the backcloth to the next election is black, the voters would hold on to nurse for fear of something worse.

True, it worked for John Major in 1992. The worry for Mr Brown is that Labour was not judged fit for office then. If Mr Cameron can convince the voters in a way that Neil Kinnock could not especially on the economy he will be in business. By the next election, I suspect Datagate and Donorgate will have long faded in the public's mind. The economy will decide it, stupid.

Read Andrew Grice's online column at independent.co.uk/todayinpolitics