Gordon Clown .Com

Unsurprisingly this weekend we were greeted with the news that the National Debt has now passed the £500bn mark. In a “miracle” economy whose foundations are built entirely upon debt, debt and more debt, the news that the country owes more money than ever before can hardly come as a shock to anyone. Gordon has slowly but surely sunk us further and further into the mire, and it’s now anyone’s guess as to whether the house of cards can be supported long enough for him to make the switch nextdoor.

One of the gigantic pits in which our money appears to be gathering is the coffers of various Private Finance Initiative companies, who are seeing profits beyond their wildest dreams, just so Gordon can keep a bit of the countries mammoth debts off his balance-sheet.

One of the more recent symptoms of the whole spiral of debt beginning to unravel seems to have been the fact that even the grossly fudged CPI measure of inflation is hitting new heights, with the Office for National Statistics unable to tweak it any further to cover up the truth. This amazingly seems to have also taken people by surprise, but it appears the cat is firmly out of the bag on inflation now as traders in the City are betting that two more rate hikes will be needed to follow January’s “shock” rise, both likely to be before the summer. But for rates to hit 5.75% could yet prove relatively benign in comparison to the starker alternatives that the Bank of England may be forced into.

The Telegraph continues to admirably stick the knife into Gordon, their Sunday economics editor commenting that “Britain is heading for trouble - and it’s all Mr Brown’s fault”:

Could Britain get caught in a “wage-price spiral? Could our high-performance economy, “the most successful in the Western world” as Gordon Brown likes to tell us, get sucked into the kind of inflationary problems that did so much harm in the 1970s?

It is a horrifying prospect and, in the wake of last week’s price data showing the most important inflation index at a 15-year high, increasing numbers of analysts think such a disaster could happen.

So, in the coming months, as the interest rate rises bite and debt-soaked shoppers scream, the mood in the country will turn against Mr Brown. Of most immediate concern is last week’s news on inflation, and the related danger of a wage-price tailspin. But that is only the latest sign that Britain’s strong economy could soon go into reverse.

Were that to happen, millions of households and businesses would see a swing in their financial fortunes, just as Mr Brown moves into Number 10. His reputation for sound economic management, the centrepiece of his claim to the premiership, would be flushed away for good.

The supreme irony is that come early summer, just at the moment when he achieves his ultimate ambition, the fates have decreed that a toxic combination of rising interest rates, rising inflation, rising taxes and rising industrial discontent will rain on his coronation parade.

While he desperately scrabbles around attempting to draw our attention elsewhere, a few home truths seem to be dawning on the general public about the true state of the british economy. The fact that a 0.25% rise in interest rates comes as a shock to people while inflation is way over it’s 2.0% target at 2.7% (and likely to climb even higher when figures are released on Tuesday), gives some picture of how foggy the general public conciousness continues to be on the subject of the economy.

This news, however, appears to be making at least some sit up and take notice, not least the Daily Telegraph, where we are reminded that any oncoming hardship is most likely to be all Gordon’s fault:

With typical dishonesty, Gordon Brown’s apologists were quick to say that he would support the Bank of England’s aggressive (and, in my view, entirely correct) monetary policy in the interests of sound money. But this is a man whose borrowing addiction and spendaholic cravings are causing the broad supply of money in this country to rise by a whopping 14 per cent a year, way ahead of the combined rate of inflation plus growth. If Mr Brown were as clever as he thinks he is, he would remember the true definition of inflation as too much money chasing too few goods. That is exactly what we have now, and it is his fault.

He has been doing exactly what the disastrous Tory chancellor Tony Barber did during the oil price boom of 1973. He has pumped money into the economy, trying by interventionist means to keep everything buoyant: in effect, trying to rig the markets. Therefore, we have inflation rising towards a level that is dangerous for our economic equilibrium. In fact, it has probably already gone well past that point.

There is a threat of further interest rate rises next month. Whenever they come, there will certainly be more. Thursday’s rises will already add to a growing trend of house repossessions. Subsequent increases may cause an avalanche. The effects of Mr Brown’s mismanagement could be ghastly over the next few months. It won’t just be that some people will no longer be able to afford to pay their mortgages. Property prices will fall, in some areas quite precipitately. Retailing, which claims already to be feeling the pinch, will have a torrid time. Our exporters, such as they are, will suffer from their goods becoming dearer in overseas markets, as high interest rates drive up the value of sterling against other currencies. People will lose their jobs. The take from taxes will be squeezed. In order for Mr Brown to maintain his programme of social engineering, he will have to tax those in work even more, and find new ways of stealthily taxing all of us.