Britain's Gordon Brown - a Tough Act to Follow?

Gordon Brown will hope to go down in history as the finance minister who freed Britain from the shackles of a boom-bust economy, ushering in a golden decade of steady growth, low inflation and rising employment.

To his critics, he will be remembered as the minister who squandered the opportunities of an unprecedented era of global economic stability, leaving the country with a rising debt pile and dangerously over-inflated housing market.

As Britain's longest serving chancellor of the exchequer in 200 years, Brown's place in history is assured even before he fulfils his ambition to succeed Tony Blair as prime minister.

With no heavyweight challenger in sight and an endorsement from Blair this week, Brown is widely expected to get the keys to 10 Downing Street by July, meaning the country's purse strings will be handed to someone else.

The most enduring legacy of Brown's 10-year tenure at the Treasury will be his decision to give independence to the Bank of England, leaving the central bank to set interest rates.

The shock announcement, days after the Labour government swept to power in May 1997, is widely praised as Brown's best.

Gone at a stroke were the days of imprudent politically motivated pre-election interest rate cuts. In their place came historically low borrowing costs and the expectation that inflation would stay low for good.

“It was a brave decision that cemented low inflation expectations," said Ross Walker, an economist at the Royal Bank of Scotland.

Brown's decision to keep Britain out of the euro has also worked to his credit. Fears that London would suffer as a financial centre have proved unfounded and Britain has enjoyed faster growth and higher employment than almost any country in the single currency bloc.


Brown has joked that there are only two types of chancellor: those who fail and those who get out in time.

Under his stewardship, Britain has enjoyed its longest period of economic expansion since the World War Two. This is no mean feat given he faced a financial crisis in Asia, a busting dotcom bubble, a global recession and record energy prices.

But there are signs trouble may be brewing. Inflation has picked up sharply in recent months, forcing the Bank of England to explain publicly for the first time why it has risen so far above its target.

Strong growth has also been supported in recent years by generous -- or some would say profligate -- spending on public services.

A combination of low interest rates and roaring house prices has also encouraged individuals to borrow freely. Household debt has more than doubled since 1999 and Britons are now sitting on a debt pile worth more than one trillion pounds.

Critics says Brown's successor, and the country at large, will now need to pay for this overspending.

"Ultimately, we are all skating -- not to say wobbling – on thin ice," says Peter Spencer, economic advisor to the Ernst and Young ITEM Club, a business consultancy.

"Both as individuals and as a country we have borrowed a huge amount to support this growth. The bottom line is that we are all living beyond our means."

Brown's successor will inherit an economy that is growing strongly. Indeed, the International Monetary Fund predicts Britain will grow faster this year than any other economy in the Group of Seven rich nations club.

But years of largesse means the incoming finance chief will be forced to slam on the spending brakes.

Brown has already announced public spending will need to slow over the next three years to half its recent rate, leaving his successor with little room for manoeuvre.