Buy Now Pay Later

It remains to be seen whether Alistair Darling's VAT cut really will encourage spending over Christmas, and whether his proposed increase in the income tax personal allowance will persuade more of our fellow citizens to splash out on a few essential retail luxuries. Certainly one can't accuse the chancellor and his boss at No. 10 of doing nothing. They have been little whirlwinds of activity, often seeming to simply dizzy the Tories into bewilderment and inaction. But the Tories are starting to find their voice, and it is not an unreasonable or unconvincing one. I'm no economist, unlike the legions of bankers and financiers who presided over the, erm, banking crisis, but I am beginning to doubt the long-term wisdom of increasing the country's debt mountain when the origin of this very financial hurricane stems from bad debt arrangements. For years, conventional wisdom - including that of Gordon Brown - had it that fiscal prudence meant keeping borrowing down. Now, apparently, the government can't borrow enough. Ronald Reagan was once famously challenged about the size of the government deficit and replied that he thought it was big enough to take care of itself. Brown and Darling are far too sombre men to apply a joke to the burgeoning problem of government debt, but there are no sums that they have yet presented for public view which show how they intend to start reducing the mountain they've built.

Good stewardship of the economy of course means having the flexibility to know when a bail out is in order, and we all like to think that governments can take action to alleviate nearly any of our problems, but there might also be time for a reality check about how exactly the long-term position looks. Most people using credit are meant to have some idea about how they will pay it back. Perhaps modern governments don't have to be under the same pressure?