Prime Minister Brown has followed up his slight gains in the polls after the Labour Party conference last month, with what he desperately hopes is a decisive bailout of the banking system that will fend off financial collapse.
Brown and Chancellor Darling claimed that the plan was essential and ground-breaking, and that the rest of the world must now follow our lead. But unlike the aftermath of the conference, the reaction has been mixed. While the country’s financiers have generally welcomed the plan, investors remained sceptical and the FTSE 100 fell to a four-year low, while three month LIBOR rose again. At the same time, the feeling among the voting masses is that he is using taxpayers’ money to prop up a system which he had allowed to build up vast toxic debts. This has anchored him to the UK in order to undertake a countrywide tour and explain the thinking behind it, at a time when he may be better employed persuading the rest of Europe to follow our lead. At least he will not be forced to turn down any invitations to visit Iceland, as the reception there is likely to be distinctly frosty.
Transparency has replaced prudence as his new buzzword, but he now needs to ensure that the message is filtered down to the FSA immediately. While he professes anger at the huge bonuses and ‘excessive’ remuneration for bankers who have made huge losses, the FSA’s proposed ‘code of conduct’ covering bonuses may well prove to be a toothless tiger. Brown dearly wants to be remembered as a man who is good in a financial crisis. However, if this massive £400-£500bn plan does not start to stabilise the situation it will plunge us into a deep recession, resulting in unemployment not seen since the early 80s, and in all likelihood the beginning of the end for New Labour. n
