John Redwood’s blogging has been indispensable reading over recent days.  He’s been dissecting the economic developments that have been dominating the news and has rightly questioned the decision to publicise the fact that Northern Rock was accessing the Bank of England’s lender of last resort facilities.

In an article for The Sunday Telegraph, David Cameron joins the debate.  The Conservative leader welcomes the liquidity lifeline given to Northern Rock by the Bank of England, asks a few pointed questions about financial regulation and then critiques the Government’s handling of debt issues:

"Though the current crisis may have had its trigger in the US, over the past decade the gun has been loaded at home. Under Labour our economic growth has been built on a mountain of debt. And as any family with debts knows, higher debt makes us more vulnerable to the unexpected. In short, the increases in debt in the UK have added a new risk to economic stability.

Over the past decade, the level of personal debt has trebled, to £1.3 trillion. We owe more than our entire national income. So now when interest rates go up, the impact on homeowners escalates. Mortgage payments are at their highest for 15 years. Add in Gordon Brown’s stealth tax rises, and real take-home pay for the average family is falling. No wonder insolvencies have quadrupled in the past 10 years, and are now at record levels. Someone goes bust in the UK every seven minutes.

Meanwhile, for all its past talk of prudence, the Government has been on a spree of gigantic proportions. Despite the world economic boom, Gordon Brown is borrowing £35 billion a year – more than the entire schools budget. No wonder the IMF has said that this cannot continue: our Government is borrowing more than any other in Europe. It takes quite something to make Italy’s borrowing look prudent."

Householders are certainly facing the squeeze.  The Business reports that increases in base rates over the
past year have added nearly £80 to typical monthly repayments on a
£100,000 mortgage.  June loans to first-time buyers fell by 7% in number and 4% in value.  Credit card and other borrowings are also pinching consumers.

It is not yet clear, however, if bad economic times will benefit the Conservatives.  A Populus poll for Friday’s Times suggested that the Brown-Darling team was preferred over the Cameron-Osborne team by 61% to 27% to handle difficult economic times.  ‘Hold on to nurse for fear of something worse’ appears to be the voters’ motto – as it was in the 1992 recession when voters had to choose between John Major and Neil Kinnock.   Over at UK Polling Report, Anthony Wells rightly urges us to be a little cautious about this poll finding, however.  He asks us to remember all those pre-Brown polls that suggested voters wouldn’t welcome him as Prime Minister.  He writes:

"We’ve seen with the hypothetical polls from before Brown became Prime Minister that people aren’t actually very good at predicting how they would react to events in the future. In reality we cannot tell if, faced with economic troubles, people would turn to Gordon Brown…or blame him."

9.45am: Shadow Chancellor George Osborne gave a brief brief interview on this morning’s Sunday AM programme.  Mr Osborne attacked Gordon Brown’s record of borrowing – Britain’s economy is built on debt, he said, and was now very vulnerable.

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