How Brown's bungling could pose a threat to the pound

Granting the Bank of England its independence was a masterstroke, allowing him to present himself as a sound moneyman. But his recent actions threaten the credibility of the MPC and, with it, confidence in the pound.

Would Gordon Brown be such a shoo-in to be the next prime minister if he hadn't given the Bank of England its independence on almost his first day in office? I doubt it very much. Almost everything else he has done since then has been at best a mess. Look at the tax-credit fiasco, which has seen some of Britain's poorest families pursued for thousands of pounds of overpayments; or the tax grab on pension funds that has virtually wiped out Britain's company defined benefit schemes; or his endless tinkering with the tax system, which has doubled the number of pages in the tax code.

The beauty of his Bank of England masterstroke was that it allowed him to present himself as a sound money man. That won over the City and reassured the middle classes. It didn't matter that, at heart, Brown remained true to his socialist roots, with his unshakeable belief in the virtue of an all-powerful state. They knew that socialists have historically destroyed far more wealth and wreaked far greater havoc on the economy as a result of inflation than they ever have through punitive taxation. The Bank of England is the goose that has laid Brown's golden political eggs.

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Simon Nixon

Simon is the chief leader writer and columnist at The Times and previous to that, he was at The Wall Street Journal for 9 years as the chief European commentator. Simon also wrote for Reuters Breakingviews as the Executive Editor earlier in his career. Simon covers personal finance topics such as property, the economy and other areas for example stockmarkets and funds.