Cover of MoneyWeek issue 406

Brown's bailout

17 October 2008 / Issue 406

Can it really work? PLUS:

  • Paul Hill on one Indian share to buy today
  • Can Britain afford its public-sector pensioners?
  • How George Bush's dancing made me a million

Excerpt

Has Gordon Brown saved the day?

“We’ve had some success in getting the price of oil down,” said Gordon Brown earlier this week. It’s an oddly economically illiterate comment coming from a man currently being hailed as the saviour of the global financial system, isn’t it?

Because, of course, Brown hasn’t brought the price of oil down at all. Indeed, whatever he might like to think, he has no more control over what the global market fancies paying for a barrel of crude than he does over what cash-rich property vultures are prepared to pay for the Notting Hill houses of unemployed bankers. No, what has actually brought the oil price down is recession in America and the threat of recession everywhere else. Gordon Brown can claim credit for the UK’s recession if he likes (that would seem to make sense – it is largely his fault), but I’m not sure he can also put his hand up to Iceland’s, Spain’s or America’s.

Still, being responsible for our recession alone should be enough for him. It’s going to be a nasty one. The vast deleveraging of our economy underway at the moment, combined with the negative wealth effect of falling house prices, means this is a real downturn. It will be easily bad enough by the end of next year for Brown heartily to wish he had never claimed credit for it.

• Read the full editor’s letter here: Has Gordon Brown saved the day?