Farewell, New Labour

摘要

Once they started falling, the totems toppled like ninepins this week. For n years, New Labour preached the gospel of fiscal prudence: money would be borrowed only for investment, and public net debt kept below 40% of GDP. Eco-rnnomic boom and bust were over; steady prosperity was the shape of things to come. Against this benign background, Britain's rulers felt "intensely relaxed" about the prospect of people getting filthy rich: in three elections Labour pledged not to raise the top rate of income tax, set at 40% in 1988.rnNot one of these pillars has survived the revelations in this week's ￡20 billion ($31 billion) fiscal-stimulus plan. Borrowing will hit 8% of gdp in 2009-10 and debt 57% of gdp in 2012-13, even on the government's optimistic assumptions. The Treasury predicted in March that the economy would grow by 2.5% next year; it now thinks output will shrink by 1%. And a new 45% tax rate for the rich will be imposed from 2011. New Labour's compact with the aspiring middle classes has collapsed, and what happens next is anyone's guess.