Visiting Liverpool Lord Heseltine told ConservativeHome that "difficult economic times" lay ahead for Britain. Gordon Brown had squandered the legacy that Ken Clarke gave him, the former Deputy Prime Minister said, and that "there was no cushion" to ease the hardships that are likely to come.
Lord Heseltine remark’s follow last night’s warning from David Cameron that "Gordon Brown enjoyed a decade as Chancellor living off the expansion of the global economy but he failed to prepare Britain for the future."
For a summary of Britain’s economic underperformance I recommend Policy Exchange’s October 2007 paper, More mirage than miracle (PDF). The paper by three German economists highlighted the following major weaknesses facing UK plc:
- Slower growth than all other industrialised English-speaking economies – partly inflated by an unsustainable increase in the size of the state. The paper concludes: "Judging by the fiscal deficit trend, the UK is now in worse fiscal shape than almost any other major Western country."
- An unstable housing market which is associated with a collapse in the savings ratio and an explosion in private debt.
- Neglect of the national infrastructure.
Fraser Nelson took up some of these themes yesterday.
Structurally the British economy is weak but the Conservatives will need to be cautious about being too gloomy. Conservatives got egg on their faces in 1998 when they spoke of a "recession made in Downing Street". I hate to say this but Vince Cable has produced the best characterisation of the current economic situation. The Acting LibDem leader has said that recent growth has been built on a flood plain and could be easily washed away.