Douglas Carswell

18 JUL 2016

The end of Osbrown?

The old Downing Street clique is out. We've got a new PM, and – perhaps more importantly - a new Chancellor. But will the new man at Number 11 ditch the Osbrown orthodoxy? Or will we just get more of the same?

In opposition, George Osborne styled himself as the radical alternative to Gordon Brown. In office, it was impossible to tell the difference.

Like Brown, Osborne borrowed during the boom years – doubling the national debt. Like Brown, he backed massive credit creation by the Bank of England. Like Brown, he tinkered incessantly with the tax code, and filled his budgets with political gimmicks.

Worst of all, like Brown, he now pretends to have saved the economy.

Eight years since the financial crisis, we're still facing the same problems. The big banks remain insolvent. Economic growth is still far too dependent on credit-fuelled consumption. Our huge current account deficit shows we're still spending far beyond our means.

Eight years of record-low interest rates haven't fixed the economy. Quite the reverse. The national debt is now so high, it's not even clear the British government would be able to bail out the banks if and when they collapse again.

Policymakers aren't prepared to do more than apply a short-term sticking-plaster: keeping zombie banks on life support by churning out credit.

The long-term solution requires the whole model of fractional reserve banking to be reined in - as I wrote several years ago in After Osbrown.

George has one advantage on Gordon: he got out before the storm. His dismissal by Theresa May might turn out to be a blessing in disguise for him.

Now Philip Hammond will be left to pick up the pieces. To fix the financial sector, he'll need to be radical.

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