Flash Gordon

Gordon (Saviour of the Universe) returned to Planet Earth today to report back on the G20 finance meeting in Washington. Announcing global backing for his plans for a fiscal stimulus (i.e. tax cuts), Brown claimed there was a clear need for rapid and coordinated action around the world.

The press summary from the G20 ran to some 3,500 words, but the only section which appeared to support Brown's position was this "Use fiscal measures to stimulate domestic demand to rapid effect, as appropriate, while maintaining a policy framework conducive to financial stability" Just 20 words, and crucially, "while maintaining a policy framework conducive to financial stability"

Cameron's response was to tell Gordon to "be straight with the British people and admit that his plans to borrow more will mean higher taxes tomorrow". Clearly this is the case, as anyone who has ever borrowed will know - at some point the money has to be paid back.

The relevant question, is whether the UK economy can sustain the level of borrowing required. Gordon's rumoured plans amount to a £30bn giveaway. The government was already projecting to borrow heavily in 2008 - and this was before the crisis developed. Now debt is expected to soar to £100bn in this fiscal year, on the back of the banking bail-outs, nationalisation of Northern Rock and Bradford & Bingley, and increased social expenditure (i.e. unemployment benefit).

Ministers have already conceded that this will mean tax increases over the medium term, say 3-4 years. (Leaving the next government to pick up the problems...)

The Conservatives have already pointed out that they believe that further borrowing and unfunded tax cuts are unsustainable, as have the Liberal Democrats. Iain Dale is reporting that Boris has joined the battle with a passionate attack on Brown in his Telegraph column, and goes on to say that the Shadow Cabinet need to be far more passionate and angry and take the battle to Brown.

I couldn't agree more. But as I suggested on Saturday, the Conservatives should agree to the tax cuts, but produce a list of public spending that they would curtail, and I'm pleased to say that by Sunday, the Telegraph was reporting that Oliver Letwin is working on a package of spending cuts. Excellent news - let's hope he delivers the goods.