Outlook: Another step towards stability

AT FIRST glance, Gordon Brown seems to have been rather more generous in the new public spending parameters outlined in last night's Mansion House speech than his reputation for donning the hair kilt ought to allow. Real increases in public spending of 2.25 per cent a year for the rest of this parliament is at the very top end of the range of possibilities suggested in the Budget red book.

But let's not be too harsh on the old puritan. The kilt seems quite hairy enough, thank you very much. The whole of that increase is to be targeted at investment in the Government's priorities of education, health and infrastructure; the lid is to be held down firmly on public sector pay, social security and other forms of spending. Furthermore, by imposing these constraints on himself, the Chancellor has left himself virtually no scope for a big pre-election giveaway. He must be the first post-war Chancellor ever to have done that.

We've desperately tried in these columns to find fault with the new Government's macro-economic policy. What other purpose are we here for but to criticise? But so far to no avail.

Even with this extra spending on investment, the Chancellor should still be able comfortably to meet his so far unpublished target of reducing the national debt to below 40 per cent of GDP. Mr Brown can certainly be faulted for some of the micro-economic measures his department is seeing through, but on the broader picture he hasn't yet put a foot wrong.

The traditional fudge and self-interested nature of British economic policy is progressively giving way to a prudent, modern and above all predictable and stable approach to the broad outline of taxation and public spending. Business and enterprise has rarely had the prospect of a better long term environment.