Sunday 16 September 2007

Warnings on Debt by the Left were Ignored.

Three years ago I set up the Left Economic Advisory Panel,(LEAP), bringing together a group of socialist economists, accountants and practitioners to provide analysis for the Left on the state of the economy and advice on both immediate and long term economic policy. It serves as a left alternative to the Bank of England's Monetary Policy Committee but examines a much wider range of objectives and consequences of economic policy and looks to the longer term.

LEAP publishes a set of analytical papers twice a year, under the title Red Papers; first prior to the Autumn budget statement and then immediately prior to the budget in the Spring.

Now that the Northern Rock meltdown has prompted a review of Gordon Brown's management of the economy and in particular his approach to allowing the unfettered operation of the finance sector I would urge a look at the paper published by LEAP as part of the Red Papers in March last year written by Tanya Adams, a City economist. You can find them on the Labour Representation Committee's website.

Adams' paper is entitled "Binge Borrowing - an unhealthy economic diet." To quote the paper, it said " The Chancellor might do well to reflect on the inherently unstable dynamics of the UK economy. Since New Labour came to power the so-called growth miracle has been fuelled by a relentless rise in personal debt levels.......relying on excessive personal sector borrowing as a major driver of economic growth creates the potential for all sorts of stresses and strains further down the line .....No one can guarantee that such a wanton and reckless increase in the country's debt burden may not trigger a relapse at some point in the next two to three years. The UK may yet pay a heavy price for an economic policy that has increased the risks posed by the accumulation of excessive debt."

LEAP meets again this month and will be publishing its alternative Autumn analysis. Watch this space. I will make sure we send a copy of LEAP's Red Papers this year to Alistair Darling. He will need them.