Gordon Brown is actually uniting the world, so far as his approach to the downturn is concerned, but not in the way he’d like us to think. From Tokyo to Toronto, finance ministers are saying that countries with a budget problem (like Britain) shouldn’t seek to borrow their way out of this. Slowly, a consensus is forming. Extra borrowing is fine for well-run countries that managed to pay off debt and run a budget surplus in good times. But countries like Britain – that blew her budget even in a debt-fuelled boom – will destroy their credibility (and currency) if they try to borrow even more now.
It’s not just schadenfreude that makes the Germans so angry. They are making an important economic point: debt matters. Countries who borrow in the good times, for short-term gain, pay a long-term price.
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