Five reasons why Gordon Brown shouldn't be allowed anywhere near the IMF

20 May 2011

I have long been of the view that when economic historians review the last 20 years they will condemn Gordon Brown as one of the worst Chancellors (and Prime Ministers) we ever had. I struggle to see how any coherent case can be made for him to be considered as the new head of the International Monetary Fund in the wake of the departure of the disgraced Dominique Strauss-Kahn.

I'll offer five outstanding reasons why I think history will judge his handling of the economy so harshly.

From the moment he took office he set about destroying our pensions system with new taxes. We are left with a legacy of a mamoth pensions funding crisis.
He presided over an unsustainable consumer credit boom despite the constant warnings of economists.
The system of regulation he put in place was bureaucratic, expensive but, ultimately, ineffectual and we are still clearing up the mess. Just look at the millions of PPI policies it allowed to be mis-sold. And don't even start on the mortgage market, the investment banks,the derivatives market...
When the out-of-control banks hit a brick wall he threw public money at them but with no conditions attached, no public control and not a clue about what an exit strategy would look like.
He is praised for his prompt response to the banking/credit crisis but actually he just laid the foundations for the next crisis by pushing billions into the economy through quantitive easing, again without any control. Now our money is, among other things, creating a boom in commodities speculation which is pushing up inflation so that ordinary people end up paying twice to bail out the banks. And still the banks are not lending to decent, well-run businesses.

That will do for starters. If the great early 20th century economist J M Keynes were alive I have little doubt that these would form the first five chapters of a searing condemnation of Gordon Brown's record entitled 'The Economic Consequences of Mr Brown'.

Topics: John Maynard Keynes, International Monetary Fund, Gordon Brown, Dominique Strauss-Kahn

IMF bank tax proposals tick off one election issue with a minor victory for Labour

21 Apr 2010

The leak about the proposed double tax on banks from the International Monetary Fund strikes directly at one of the policy differences between the three main parties in the UK General Election campaign. Although a relatively discreet issue, this topic has already surfaced a couple of times in the campaign.

All three talk in their manifestos about the need to impose a levy on the banks to enable taxpayers to claw back some of the billions that has been poured into supporting them. The Liberal Democrats are the clearest, saying that they would introduce a levy which will remain in place until the banking sector is restructured. By restructured they mean imposing a Glass-Stegall like regime in the UK, separating retail and investment banking. They say they would impose the levy unilaterally.

Labour, on the other hand, stuck to its refusal to support a banking levy unless agreed internationally, which now seems quite likely following the proposals from the International Monetary Fund. The Tories are somewhere in the middle, saying they would impose a levy but would prefer to move in this direction through international agreement although are prepared to act unilaterally if necessary.

I have to admit that I thought the prospects for international agreement on this issue were slight but with the United States and Germany also pushing hard for action it now seems likely that the IMF proposals will win the backing of the G20 finance ministers next week and the European Union shortly afterwards.

Not surprisingly, all three parties moved quickly this morning to support the IMF plans but it has to be Labour who will feel most satisfied as they have been vindicated in their stance seeking globally co-ordinated action.