The G20 and the budget are a chance for ministers to fight back
By Richard Hall, Managing editor of The House Magazine
Peter Mandelson
clearly
hasn’t lost his
touch. The peer’s
four-letter retort
last week to the
boss of coffee
shop chain Starbucks,
who criticised
the British economy, was expertly
presented as that of a brave fighter for
British jobs and companies against the
quitters who run the country down.
But it is not just abroad that economic
confidence in Britain seems to be seeping
away. The main plank of the
government’s response to the financial
crisis was last autumn’s taxpayer-funded
bailout of failing banks. As the
blame for the recession attaches itself
to the banks, and the lines of credit to
businesses and individuals remain
blocked, public support for the bailout
is waning.
This translates into falling poll numbers
for Labour. As MPs return after the
half-term break, the feeling that public
opinion has shifted away from the
government’s handling of the economic
crisis has hardened. The mix of the
latest polls, with reports of cabinet
ministers buttering up trade unions
and party members in preparation for
a post-election leadership race, turns
Labour back towards the crisis days of
summer when Gordon Brown’s premiership
looked like it was heading for
a premature end.
However, the London meeting of G20
leaders in the first week of April, and
the Budget three weeks later, offer
ministers the chance to mount a spring
offensive. Their task is to formulate a
set of economic responses that can
generate popular support.
The government was slow to act when
limiting the levels of bonus pay-outs
to executives of banks which were
part taxpayer-owned. But recent
signals show an appreciation of the
need for economic measures to be
underpinned by public support.
The prime minister has signalled, in a
‘Road to the London Summit’ recovery
plan, that he will use the G20 meeting
to work towards a deal clamping
down on tax havens, targeting firms
who dodge taxes and regulations.
Clearly, this will have popular appeal
among voters dutifully paying as they
earn and seeing their taxes used to bail
out failed bankers. The plan can only
work with widespread support around
the world, but Barack Obama, just
after his election in November, signalled
that he was prepared to move on
the issue.
Other main prime ministerial objectives
for April are agreement on international
banking regulations, and a coordinated
effort among nations to
stimulate economies by lowering interest
rates. This was followed by hints
of further tax reductions to be announced
in the Budget.
The prime minister exuded confidence
that a ‘grand bargain’ could be reached
among world leaders and that the global
economy could be restored to the
path of growth. But by doing so he
raises the political stakes. Should the
‘grand bargain’ be struck, and be followed
up with a popular Budget
which puts more money in consumers’
pockets, generates jobs through
major public works, and clamps down
on greedy tax-avoiders, another
Brown bounce could yet materialise.
But should agreement among world
leaders prove elusive and the retreat
to protectionism accelerate, the prime
minister would suffer internationally
and at home, and confidence in the
British economy, and his government,
would sag further. Then Labour MPs
with seemingly comfortable majorities
would have to wake up and smell
the coffee.
* The House Magazine, partenaire britannique de La Revue
Parlementaire, a été créé en 1976 par un groupe de députés
afin de traiter et débattre de l’ordre du jour parlementaire
de manière impartiale mais incisive. Il est depuis 30 ans
l’hebdomadaire des parlementaires britanniques.
