When Gordon Brown became Prime Minister

On June 27th, 2007, Tony Blair resigned, and Gordon Brown became Prime Minister. It was not a good day for Britain. He had always resented Tony Blair becoming Labour leader and then Prime Minister, but had a free hand on the economy as part of the deal. After 10 years his allies finally out-manoeuvred Blair and forced his resignation. By then Brown’s seething resentment had made him ill-tempered and grumpy, in the habit of shouting and throwing things at his subordinates.

Brown’s premiership was coloured by the Financial Crisis, which took up most of his time and attention. As Chancellor he had spent money like there was no tomorrow, specializing in “stealth” taxes that would slip unannounced into his budgets. He claimed to be a neo-Keynesian, but he was not.

The Keynes policy was supposed to be spending at the trough of a cycle and repaying it in the boom years. Brown was spending in the boom years and had no reserve when the crash came. He claimed to have “abolished the business cycle” by smoothing “boom and bust,” but it turned out that it was only “boom” that he’d got rid of. He always called his spending “investment,” but he used the word as someone might say they had “invested” in a bar of chocolate.

Credit should be given where it is due, though, and he did two good things. In his first days as Chancellor, he gave the Bank of England its independence. The ASI had advocated that for 20 years to stop Chancellors being tempted to create inflationary booms ahead of general elections.

His second great achievement was to keep the UK out of the Euro. Blair, the keen Europhile, had wanted us to join, but Brown drew up his 5 conditions on the back of an envelope. The conditions could not be met, so the UK did not join, and had the flexibility of an independent currency in the wake of the big crash when it came.

One of his worst acts, of which there were many, was to sell Britain’s gold reserves at the trough of the gold market. Indeed, he made it plunge even lower by announcing in advance his intention to sell. He sold 395 tonnes of it at £3.5bn. Had he not done so, it could have fetched over 3 times that sum a few years later.

Otherwise his premiership will be remembered as one in which he was forced to react to events, leaving little space to initiate the supply side reforms that Britain needed. His short term in office will be exceeded by days by that of Theresa May when she formally steps down. Neither featured many significant or memorable achievements.