We should be grateful to Gordon

Brown saved the country from falling into a second Great Depression

The New Statesman editor, Jason Cowley, sent me an email a week or so ago suggesting I take a week off. "Come back in a fortnight," he wrote, "when we will have a clearer sense of where we are. Could 'Slasher' Osborne really be chancellor on Friday?" I replied that he couldn't. Then, on Monday 10 May, Jason wrote again: "How are you fixed? I know you're not due to write this week, but do you want to write about the eurozone and the huge rescue package?" "Yes," I replied. I taught a class and then started writing.

The big news that morning was the huge intervention by the European Union to provide almost $1trn in loans to end the region's sovereign debt crisis. The political leaders of the eurozone agreed to the rescue package after the Greek fiscal crisis produced a sell-off of Spanish and Portuguese debt. A divided European Central Bank (ECB) agreed to prop up the euro by agreeing to purchase government bonds, despite the fact that ECB president Jean-Claude Trichet had denied they were going to do so at a press conference on 6 May. This statement, and the fact that the ECB seemed not to comprehend the scale of the difficulties, appears to have been the catalyst for the crisis.

Too many cooks

The Belgian economist Paul de Grauwe was reported by Bloomberg as saying that European leaders "have realised there is more to monetary union than a central bank. Whether you like it or not, that is increasingly a fiscal union." Only a few hours after the rescue programme was announced, the Bundesbank president Axel Weber acknowledged that buying bonds has "significant risks".

The EU package was well received by the markets, however. The euro rose against the pound, the yen and the dollar, before dropping back. Stock markets were up all around the world and the share prices of the banks, which had collapsed over the previous week or so, rose dramatically: Barclays's share price increased by 16 per cent; those of Lloyds and RBS by 14 and 13 per cent respectively.

In France, BNP Paribas increased its share price by 21 per cent, Crédit Agricole by 24 per cent, while in Germany, Deutsche Bank was up 13 per cent. Unfortunately, all this may not have been enough to prevent Greece from defaulting on its debt. The rescue package may have made things more unstable rather than less, since the markets now understand that it takes a deepening financial crisis for European governments to act.

This looks like the beginning of the end for the euro. The ECB is structurally incapable of acting quickly and decisively - it has too many members who speak too many languages - and its focus on controlling inflation is outdated. Indeed, the Bank itself was a major cause of the problem that led to a little Greek tragedy turning into a Europe-wide disaster that had to be fixed immediately.

Gordon Brown's decision to keep Britain out of the euro (remember his five "tests" for entry?) now looks inspired. As for his principled resignation on 10 May, it dramatically improved the prospects of the Labour Party sealing a coalition deal with the Liberal Democrats. (Let's hope that the leadership contest that is to follow doesn't become a fist fight.) A Lib-Lab alliance would be best for the well-being of the man on the Clapham omnibus. I had always expected that there would be a Lib-Lab deal without Gordon Brown as the leader - I said as much on Richard Quest's show on CNN on 15 April.

This would be no more a "coalition of losers" than a Tory-Lib Dem coalition. No single party has a majority of MPs and ours is a parliamentary system. Cameron lost an election he should have won, against an unpopular government in a terrible recession, having frittered away a 20-point lead in the opinion polls. The Tories failed to win because people didn't buy their austerity message. Voters were right: I simply don't trust Slasher, Cameron or Hague. On the economy, the choice is between Lib Dem-Labour flexibility and Tory ideology. I know which I would choose.

I was impressed by Shirley Williams's comments warning against a Lib Dem alliance with the Tories. And even Graham Brady, whom I know from his days on the Treasury select committee and who is tipped to be the new chairman of the powerful Conservative backbench 1922 Committee, warned the Tories of the dangers of an alliance. I can't see that a Lib Dem-Tory alliance could last very long, making another election, perhaps later in 2010, inevitable. In such a contest, Labour under a new leader - David Miliband, say - would be tough to beat.

Lasting legacy

This is an opportune moment to assess the Prime Minister's economic legacy. I think this has been substantial. In 1997, the incoming Labour government was anxious to appear credible and competent on the economy. Brown's decision as chancellor to create an independent Bank of England was inspired. He then helped to deliver a decade of strong economic growth. It was not his fault that there was a global financial crisis.

I think Brown's principal legacy will be his successful and speedy handling of the financial crisis that engulfed the UK economy in the autumn of 2008. The Nobel Prize-winning economist Paul Krugman went so far as to argue that Brown, together with the Chancellor, Alistair Darling, "defined the character of the worldwide rescue effort, with other wealthy nations playing catch-up". That is exactly right.

The Federal Reserve emerged from the crisis with much more credit than the Bank of England, which failed to cut interest rates early enough and equivocated over rescuing Northern Rock. But Brown acted swiftly to save our banks and he showed the way forward to other, more recalcitrant western governments. Unemployment rose much less than was feared, in large part because of decisive action by the government.

The Prime Minister understood how important it was to keep the stimulus in place to avoid a double-dip recession. Brown saved the country from falling into a second Great Depression. And that is a big deal.

David Blanchflower is Bruce V Rauner Professor of Economics at Dartmouth College, New Hampshire, and professor at the University of Stirling.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

This article first appeared in the 17 May 2010 issue of the New Statesman, On a tightrope

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The strange death of boozy Britain: why are young people drinking less?

Ditching alcohol for work.

Whenever horrific tales of the drunken escapades of the youth are reported, one photo reliably gets wheeled out: "bench girl", a young woman lying passed out on a public bench above bottles of booze in Bristol. The image is in urgent need of updating: it is now a decade old. Britain has spent that time moving away from booze.

Individual alcohol consumption in Britain has declined sharply. In 2013, the average person over 15 consumed 9.4 litres of alcohol, 19 per cent less than 2004. As with drugs, the decline in use among the young is particularly notable: the proportion of young adults who are teetotal increased by 40 per cent between 2005 and 2013. But decreased drinking is not only apparent among the young fogeys: 80 per cent of adults are making some effort to drink less, according to a new study by consumer trends agency Future Foundation. No wonder that half of all nightclubs have closed in the last decade. Pubs are also closing down: there are 13 per cent fewer pubs in the UK than in 2002. 

People are too busy vying to get ahead at work to indulge in drinking. A combination of the recession, globalisation and technology has combined to make the work of work more competitive than ever: bad news for alcohol companies. “The cost-benefit analysis for people of going out and getting hammered starts to go out of favour,” says Will Seymour of Future Foundation.

Vincent Dignan is the founder of Magnific, a company that helps tech start-ups. He identifies ditching regular boozing as a turning point in his career. “I noticed a trend of other entrepreneurs drinking three, four or five times a week at different events, while their companies went nowhere,” he says. “I realised I couldn't be just another British guy getting pissed and being mildly hungover while trying to scale a website to a million visitors a month. I feel I have a very slight edge on everyone else. While they're sleeping in, I'm working.” Dignan now only drinks occasionally; he went three months without having a drop of alcohol earlier in the year.

But the decline in booze consumption isn’t only about people becoming more work-driven. There have never been more alternate ways to be entertained than resorting to the bottle. The rise of digital TV, BBC iPlayer and Netflix means most people means that most people have almost limitless choice about what to watch.

Some social lives have also partly migrated online. In many ways this is an unfortunate development, but one upshot has been to reduce alcohol intake. “You don’t need to drink to hang out online,” says Dr James Nicholls, the author of The Politics of Alcohol who now works for Alcohol Concern. 

The sheer cost of boozing also puts people off. Although minimum pricing on booze has not been introduced, a series of taxes have made alcohol more expensive, while a ban on below-cost selling was introduced last year. Across the 28 countries of the EU, only Ireland has higher alcohol and tobacco prices than the UK today; in 1998 prices in the UK were only the fourth most expensive in the EU.

Immigration has also contributed to weaning Britain off booze. The decrease in alcohol consumption “is linked partly to demographic trends: the fall is largest in areas with greater ethnic diversity,” Nicholls says. A third of adults in London, where 37 per cent of the population is foreign born, do not drink alcohol at all, easily the highest of any region in Britain.

The alcohol industry is nothing if not resilient. “By lobbying for lower duty rates, ramping up their marketing and developing new products the big producers are doing their best to make sure the last ten years turn out to be a blip rather than a long term change in culture,” Nicholls says.

But whatever alcohol companies do to fight back against the declining popularity of booze, deep changes in British culture have made booze less attractive. Forget the horrific tales of drunken escapades from Magaluf to the Bullingdon Club. The real story is of the strange death of boozy Britain. 

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.