After several weeks of worrying silence, during which time Gordon Brown was able to pose as saviour of the world financial system, improving his position in the opinion polls, George Osborne has at last come out fighting. In an interview with the Times on Saturday, he drew attention to the perilous position of the currency, as the national credit comes increasingly to resemble that of Iceland or Northern Rock. "The more you borrow as a government the more you have to sell that debt and the less attractive your currency seems," he commented. "Sterling has devalued rapidly against the euro and the dollar. We are in danger, if the Government is not careful, of having a proper sterling collapse, a run on the pound."
With the pound now at a record low against the Euro and a steadily falling against an also-weak dollar, this analysis can hardly be described as unduly alarmist. It seems more like a description of what is currently happening. Osborne's suggestion that Brown's policy is storing up trouble for a future Tory government also has a ring of plausibility. The boy George returned to the attack in the Sunday Telegraph, contrasting the talk of prudence with which Chancellor Brown used to be associated with his current willingness to borrow borrow borrow and spend spend spend:
Time and again he extolled the virtues of prudence, of setting responsible limits to borrowing, of the need for binding fiscal rules, and of creating a credible macroeconomic framework that would inspire international confidence in the British economy.
He told his party conference in 1997 that he had "learned from past mistakes", acknowledging that "you cannot spend your way out of recession". As recently as two years ago, Mr Brown was telling us solemnly that "to make unfunded promises, to play fast and loose with stability is a return to the bad old days". For a while he fooled almost everyone.
But today all that talk of prudence is over. As is true in life, so it's true in politics: the fundamental test of your values is not what you say when times are good, it's what you do when the going gets tough. It was easy for Mr Brown to talk tough on the public finances when the global economy was booming, even if he was racking up the biggest budget deficit in the developed world while other countries were using the good times to build up budget surpluses.
Fair comment - and about time too. The trouble is, most of the Tory leadership has been so keen to escape the ancient slur of being the "nasty party" of economic slash and burn that they have failed to offer anything in the way of fresh or coherent analysis. David Cameron's frequently heard promise to "share the proceeds of growth" only made sense if you first bought Gordon Brown's claim to have abolished "boom and bust". But such claims are always made during periods of growth, and always turn out to be wrong. Economic crises are like volcanoes - the longer the period of quiescence, the more shattering the eventual eruption.
The Tories' mistake was not to have failed publicly to predict the downturn - no-one likes an Eeyore - but to have failed to predict it in private. Their whole policy has been premised - like the government's - on everlasting growth. And there has been no Plan B. The opposition's considered response to the recession should have been prepared in advance; instead they have presented a display of cluelessness accompanied by desperate attempts at catch-up. No wonder their poll numbers have been slipping.
The response to Osborne's overdue intervention has been a classic piece of New Labour misdirection. Instead of answering - if they could answer - Osborne's points, they instead asserted that he was irresponsible to make them. Worse, he had broken an alleged convention that opposition spokesman do no "talk down the pound" in times of trouble. (Although if Gordon Brown's public calls for ever-lower interest rates don't amount to "talking down the pound" I'm not sure what does.) The BBC, as always, followed the government's spin-doctoring slavishly, devoting a full fifteen minutes of Saturday's PM to the "story". There was a real story that they could and should have been investigating - is Osborne right?
You can see why the Labour party doesn't want to enter the discussion: it would mean questioning the consensus that it is possible to spend and tax-cut out of this recession, and that the country is in a position to do so without bankrupting itself. If serious questions are asked about Gordon Brown's approach to this crisis, it risks exposing it for what it may be, a gigantic con trick. Far better to divert attention onto a fake story about George Osborne - who, whatever else one may say about him, has not taken us into this place of fiscal peril.
Less clear is why so many in the media - and even some in the Conservative party - have taken this tactic at face value. Osborne is undoubtedly vulnerable after a series of less-than-compelling performances, the yacht business, and rumblings from some inside the party that he should be replaced. The claim that he has poor judgement is thus going to find an audience. Yet it is not because of interventions such as this that he has become a target; on the contrary, it is because of the lack of them. He has appeared lately to be Gordon Brown's poodle.
In any case, the suggestion of unpatriotism is nonsensical. The Labour attack, moreover, inflates Osborne's importance, implying that his words can move markets. Otherwise, what reason could he have not to say it? It isn't as though he has any privileged information not available to the speculators. Those in control of international funds don't need Osborne to tell them what the figures mean. If Gordon Brown's profligacy with the public finances does indeed create a run on the pound, that will be the fault of his policies, not of Osborne's words. Chris Dillow has a rather more thoughtful criticism:
If I were he, I would not have said this. If we get a genuine run on the pound, Osborne will win even if he had not made this remark, as the fall will reflect discredit upon Labour’s economic record. But now, if we don’t get such a run, Osborne will be accused of being an immature hysteric with no grasp of economics.
It's true that if there isn't a (further) collapse in sterling, Osborne will end up looking as much of a prat as he did when he posed in his Bullingdon tails. But whether or not raising the question was political astute of George Osborne, it is important that someone is doing so. The idea that at a time like this the job of an opposition is to sit on its hands and support the government in the national interest - even so as not to unsettle the markets - is not only democratically questionable, it's also dangerous. Now more than ever it is essential for the opposition to ask searching questions, to subject the government's analysis to close scrutiny, and to put forward an alternative point of view.
And here I must again defer to Mr Dillow:
The days when governments could get away with borrowing heavily are coming to an end. In recent years, there has been heavy demand for gilts from overseas, as the Chinese have looked for places to invest their surplus savings, and oil exporters have invested their revenues. But this buying is already slowing down. And it could continue to do so. As the Chinese government budget slips from surplus to deficit, it will absorb some domestic savings. And lower oil prices will give middle eastern countries less to invest.
So although we’ve been able to borrow cheaply recently, we might not be able to continue to do so - especially if/when investors risk appetite returns and they sell safer assets such as government bonds. In this sense, Brown’s borrowing is indeed irresponsible, as it leaves future generations exposed to the risk of having to pay higher borrowing costs.
Coincidentally, there is a piece in today's Sunday Times about the future role of the monarchy under King Charles. The prince's confidant Jonathan Dimbleby reveals that "there are discreet moves afoot to redefine the future role of the sovereign so that it would allow King Charles III to speak out on matters of national and international importance in ways that at the moment would be unthinkable." A 21st century monarchy, it is suggested, could be more activist and take part in public controversies - more like the (elected) president of Ireland, perhaps. For one thing, Charles doesn't want his "knowledge and experience" to "go to waste". More significantly, though, Dimbleby writes (quoting the prince's "advisers"):
Prince Charles, they continue, would inherit a very different world from that bequeathed to his mother. Because the ideological chasms of the 20th century have been bridged, today’s politicians are driven to compete for power by packaging together marginally different varieties of the same produce as they scrabble for votes on the centre ground. It is thus virtually impossible to have any horizon beyond the next election. As a result, there is a vacuum of national leadership.
I would put it another way. It isn't that the ideological chasms have been bridged - far from it - but that today's politicians refuse to offer the public a proper choice by standing on different sides. Instead they jump from rock to rock tied to each other, terrified that they will be caught on the wrong side. There is, at any given moment, a near-consensus between the parties, but the nature of that consensus is subject to wild fluctuations. For the past few years, only extremists on the left questioned the free market - by which, of course, was meant a free-for-all in the banking industry. Lately it has seemed that only extremists on the right were prepared to question vast public debt. If George Osborne is at last prepared to break this stranglehold we should all be grateful.
Whether Brown is right, or the Conservatives are right, it is right to have a debate.