Further to those comments by Mervyn King stating that Britain no longer has the ready money for another fiscal stimulus, a thought occurs. What the hell is Labour going to do for the next 15 months? They have already abandoned their summer Comprehensive Spending Review, and it looks like the budget will be a cut-price affair. They are avoiding saying what and where they will cut public spending, because it’s their last line of attack against the Tories. It looks like they are aiming all their energies at scraping past the finishing post. But can this really be dragged out for over a year?
Their entire economic policy is now in tatters. Jack Straw is announcing fantasy politics ‘to be implemented some time in the next Parliament’. No one seriously believes that an ID card system will be operational, or even irreversible, by June next year. What are Labour going to do for a year? It looks far more as though they are gearing up for an election sooner rather than later – at least judging by Brown’s performance in the Commons yesterday.
I’ve previously been sceptical about the prospect of an early election. Labour will almost certainly lose it, and why lose this year when you can lose next? But there is a tempting counter-argument now. Labour can delay taking the horribly painful fiscal measures that will be needed for long enough to lose an election. The Tories will then take the blame, and Labour will be well placed to berate them for every cut in the public sector, as well as for every rise in taxation. It’s beginning to look like the least worst option for Labour, go early, minimise losses and leave the tidying up to the Tories.