A welcome return to Big Government?

Despite the kerfuffle over the MPs’ expenses scandal, it’s still the economy, stupid. The Guardian sounds the alarm. “Bank of England braced for third wave of financial crisis. Surprise £50bn cash injection is attempt to avert new phase of credit crunch.”
The FT contextualises better.

The boldness of the Bank’s plan shows it is prepared to risk future inflation to prevent deflation today. Deflation would have far more damaging consequences for a highly indebted economy like the UK, bringing spending to a standstill and dramatically lowering living standards.

No more than the Bank of England, the rest of us aren’t deceived into believing that some green shoots sprouting from the banks means propagating growth in the wider economy.

Big Government is back – but with what effect? The Thatcher legacy that demolished the earlier, corporate version has run out. (Though here, I’m treating to you to the alternative version from the Guardian’s big leftie Seumas Milne). Government today may be reverting to the once despised policy of “picking winners.” In recession, the choices are agonising. Should Corus in Teeside be allowed to close? Why give a bridging loan to LDV while pressing ahead with the politically risky part-privatisation of Royal Mail? The FT fails to discern a clear industrial strategy but is still prepared to give Peter Mandelson the benefit of the doubt.

inisters were accused of shifting ground on which companies deserved support. His strategy is being tested to the limit as more businesses demand help to avert closures and limit job losses.

Those of us who are over fifty have been here before.. “The amount of subsidy provided to Harland and Wolff over the last five years was £225.6 million. Provision of £40.5 million has been made in the Main Estimates for 1987–88.”

Even leaving aside the huge hurdles of EU state aid rules and competition policy, we’re right not to hanker after the past. Aren’t we?

Former BBC journalist and manager in Belfast, Manchester and London, Editor Spolight; Political Editor BBC NI; Current Affairs Commissioning editor BBC Radio 4; Editor Political and Parliamentary Programmes, BBC Westminster; former London Editor Belfast Telegraph. Hon Senior Research Fellow, The Constitution Unit, Univ Coll. London