Now Gordon Brown has been found out, the Tories should think twice about copying him

Gordon Brown’s detractors have long argued that he deserves to be ranked not among Scotland’s economic geniuses but alongside its most notorious confidence tricksters. His great achievement as Chancellor was not to build a great economy, but to create the unshakeable impression that he had done so. He has succeeded, brilliantly, in claiming credit for the economic growth and lower interest rates which — in fact — were common to most developed economies over the same period. Yet he is no more directly responsible for these economic blessings than the conman Arthur Ferguson was for Big Ben (which he ‘sold’ for £1,000 in 1924).

This is not necessarily a bad thing. The capacity to boost confidence is the key attribute for any Chancellor and Mr Brown left the Treasury as perhaps the greatest master of this particular art. And the intricate Potemkin Village he has carefully erected has indeed survived Labour’s decade in power. Yet now it is starting to disintegrate and there is every chance that it will collapse during 2008. On most Hogmanays, Mr Brown has been able to look ahead to a relatively clear horizon. Now, he sees a sky black with chickens coming home to roost.

The problem was outlined best — as so many problems are these days — by Vince Cable, the acting leader of the Liberal Democrats. The UK economy ‘may not be built on sand,’ he said, ‘but it has been built on a floodplain.’ The reason is our massive exposure to debt. The average British household has spent almost all of its earnings since 1997; only house prices are making people richer. In the event of a house price crash, much of this assumed wealth would vanish. When property prices fall, governments usually follow.