Mr Brown's plans are admirable; we must hope that he will deliver them

The Chancellor, Gordon Brown, described it as a "spending review for education". It was certainly that, and lived up to the billing, skilfully engineered by Treasury spin doctors, that secondary schools in particular were to receive a boost to their budgets.

Mr Brown chose once again to place much of the extra funding directly in the hands of individual principals and heads, bypassing local education authorities. "Education, education, education," he declared and, in this Mark 2 New Labour administration, this time the cash to match the soundbite seems to be forthcoming. If all goes well, education spending will approach 6 per cent of the national income, historically a very high level and one of the best rates in the industrialised world.

Things may not all be plain sailing, however. When the Chancellor finished delivering his Comprehensive Spending Review yesterday, the London Stock Exchange FTSE 100 index closed down by 225 points to stand at its lowest level since December 1996, almost a quarter below its standing at the start of this year.

Of course this wasn't Gordon Brown's fault. Worries about accounting at Shell were far more important. But the recent behaviour of the markets should remind Mr Brown that the British economy is perched rather precariously on the edge of a more serious economic recession than the relatively mild slowdown we have experienced so far.

True, chancellors should take a long-term view, and not spend their time reacting to every flit and flurry in the FTSE. Mr Brown is right to point to the impressive progress he made earlier in his chancellorship in reducing the national debt and imposing fiscal discipline. He should be proud of his record in repaying more national debt in his time than all the previous governments in the past 50 years. He has thus left himself a good deal of "headroom" for increasing borrowing if growth slows and tax revenues fall.

Indeed, the very scale of the public spending increases he announced may have a welcome counter-cyclical effect in the event of a recession, a restoration of classic Keynesian techniques by accident, or perhaps stealth. But in maintaining his lofty silence on what has been happening in the financial sector, there is a danger that Mr Brown may seem out of touch or, worse, complacent; and that is not good for his credibility in the markets.

So, despite the uncertainties, it is perfectly possible that Mr Brown's plans will prove affordable and be implemented in full. The 400 per cent increase in spending on the fabric of schools stands out as the sort of measure that should deliver real economic rewards in the decades to come. As will the recruitment of more nurses, doctors, teachers and other public service professionals.

Mr Brown should not be too concerned about the increase in public sector pay, and that includes the low wages of council workers, because catching up with rewards in the private sector is a natural part of getting the right calibre of staff into those jobs. We should praise, too, the near doubling of the overseas aid budget, a reminder of what a Labour government should be about.

What the Chancellor is wrong to try, however, is the micro-management of every further education college or hospital ward. No matter how much money is spent, the public will not see improvements in hospital waiting times or exam results unless the reality of reform matches Mr Brown's rhetoric. "Invest and reform" is a fine idea, but over-centralisation is a flaw in his plans; he would do well to repair it.