OPINION: Brown shows deft touch in handling the media

It's the economy, stupid! This may be a well-worn phrase but does anyone believe that this Labour government would be riding so high in the polls if Gordon Brown had not managed the economy so well? With Brown in charge of the Treasury there has been steady growth, low unemployment, low interest rates and low inflation. Some say that it's because Brown has been a lucky chancellor. Others (the Tories) that he inherited a 'golden legacy.' None of that really matters to the voters, who only care about how well off they are.

Since May 1997, I have lost count of the number of Budgets and pre-Budget reports Brown has delivered, but they all had one thing in common: the media received every one well, generally. For the first time last week this was not the case. Headlines such as 'Brown's Black Hole' were not uncommon and most commentators accused him of getting his forecasts wrong at the time of the last budget. It is difficult to take this too seriously and I know that he doesn't. Brown and the Treasury have actually got all their forecasts wrong since Labour came to power. The difference this time was that Brown had overestimated the growth forecasts instead of underestimating them, meaning that he had a shortfall of cash to pay for the boost in spending on health and education.

Some may see this not just as a PR disaster, but an economic one too.

It is neither. Brown deliberately underestimated the growth in the economy for years in order to be able to announce large surpluses, and made a virtue out of paying back debt. He and his Treasury team knew, however, that in order to really make a difference to health and education not only would taxes have to rise but growth in the economy would need to be fairly strong too. In order to make the figures add up in the last budget the Treasury had to give over optimistic growth forecasts and Brown knew he would have to take a 'hit' in announcing more borrowing last week.

As usual the Treasury spin doctors played the expectations game well, so at least his House of Commons announcement was not unexpected. And while the headlines were not good most economic commentators were happy enough with what Brown had done. They were even happier that he announced the appointment of Mervyn King as the next Governor of the Bank of England.

He is seen as a safe pair of hands, with the added bonus of being even more anti-euro than Brown's economic adviser Ed Balls.

The beauty of this announcement was that it was completely unexpected, so had far more impact than if he had waited another six months. Brown had decided on King during Labour's first term, after getting rid of Howard Davies as deputy, who was perceived as being too close to Treasury mandarin Terry, now Lord Burns.

The Bank announcement shows that Brown has lost none of his skills in managing the media, even though it does all become that much more difficult when the economy is not doing so well. He has been helped in all this by the firefighters dispute, which is where the media's attention naturally lies. Hostility to unions in the media has meant that Brown has been able to get away with a lot more than usual. Only the FBU leader Andy Gilchrist has asked why he can afford £1bn for war with Iraq but not a few hundred thousand for the firefighters. Brown has even got away with saying that a 40 per cent pay rise by just a small section of workers would wreck the economy.

What set of workers is that, you may ask? MPs?

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