THERE had to be a reason why Gordon Brown chose in this month’s Budget to calculate the figures on which to determine that he was keeping within his golden rule differently from in all his previous Budgets. Cynics thought it might have something to do with the fact that on the usual basis, he would have had to concede that he was in fact breaking the rule that he had set. Not at all. Apparently he only had the interests of Joe Public in mind when he decided to opt for an averaging formula rather than a simple cash basis. He thought that it would be easier for voters to understand.

The members of the Treasury Select Committee who were entertained to this explanation were taken aback. There were included among them some of those cynics who could not help noticing that, whether or not the voters understood the method of calculation, they would certainly have been able to distinguish the difference between the Chancellor saying that he had not broken his golden rule and him being forced to admit that well, actually, yes he had.

But when Gordon Brown makes any assertion, he does so with such conviction that argument is difficult. And perhaps the committee, and the public, should merely be grateful that the Chancellor is striving to make his Budget speech entirely accessible to those who are not economists. If he thinks that he is succeeding, as he rattles off strings of numbers and talks of GDP, then he probably has some rather strange conversations when he bumps into strangers in the pub.

He obviously does not talk to the same people that the members of the committee do, nor those who share their views with Sir Andrew Large, the Bank of England’s Deputy Governor. These individuals have grown nervous about the level of indebtedness in the country, not just the Chancellor’s but that of households which could face a nasty squeeze.

Sir Andrew this week voiced his fears that the level of household debt was growing at 14 per cent and he could see it gathering speed. The result would mean that an increase in interest rates would see the cost of servicing that debt rise to the painful levels of the early 1990s.

The Chancellor of the Exchequer has no such fears. The economy that he described to the Treasury Select Committee yesterday was the very same one that he had extolled in his Budget speech, with growth in consumer spending slowing while investment by industry was picking up fast. The yawning trade gap caused him no concerns. Why should it, for with his binoculars on, he could see our exports rushing ahead at a greater rate than our exports. He could even see signs that productivity is increasing.

And yet there was one issue on which the Chancellor was less than certain. Surprisingly, it was the one over which he would have the most direct control. Asked whether there would be tax increases in tthe next Parliament, Mr Brown turned unusually coy. He wouldn’t say “yes”, but he wouldn’t say “no”. While he continued to insist that his £37 billion of borrowing was perfectly affordable and financeable, he was not prepared to quell the suspicions that he will need to raise taxes to pay the bills he is amassing.

Heavy borrowers always believe that they will be able to keep things ticking over, that something will turn up. But when what turns up is a bit of bad luck, such as a fall off in income, or a failure of tax receipts to meet optimistic expectations, then what once looked affordable may turn out not to be. That is the message that laymen can understand.

Toyota finally buries euro fever

A RARE light moment in Budget came when Mr Brown agreed with withering condescension to review the tests for joining the euro each year. The euro clearly had about as much chance of passing the tests as a notorious serial killer applying for probation. The formalities have to be gone through to satisfy campaigners but the result will scarcely be in question.

This issue once divided business people as emotionally and bitterly as the nation as a whole. Nine months after Mr Brown’s first “No, No, No,” most of business has forgotten what the fuss was all about.

Fujio Cho, president of Toyota, echoes many when he says that whether sterling is submerged into the euro is neither here nor there for basic investment decisions. It never was, despite the desperate claims of the pro-euro camp that Britain was about to be deserted by multinationals.

Mr Cho also makes clear why this was so. Manufacturers, both domestic and foreign, were horrified by sterling’s 20 per cent rise against the weakling euro in its first two years. The euro seemed a ready escape route rather than an end in itself. As the single currency recovered over the next three years, it slipped down the agenda at lightning speed.

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