GORDON BROWN is finally running out of places to hide from the ghost of his own profligacy. At home he has had to dodge the Institute for Fiscal Studies, the National Institute and all manner of City economists, as well as the official Opposition. Yesterday the international financial community blasted his reputation with both barrels.

From the East, the EU’s Joaquin Almunia formally charged the Chancellor with the sin of running excessive deficits, not just for the past two years but most likely for the next two as well. Britain is becoming the new Germany. From the West, Rodrigo Rato, managing director of the IMF, said that growth would be lower and deficits higher than consistent with Mr Brown’s own budget rules, let alone Mr Almunia’s or anyone else’s.

Both attacks are stingingly embarrassing. The Chancellor has persistently lectured IMF members and, as chairman of Ecofin, is continuing to tell fellow European finance ministers how to run their affairs.

Britain is not part of the eurozone and Mr Brown has quite reasonably criticised the rules of the Stability and Growth Pact that he is now charged with breaking. He has even helped France, Germany and Italy to get round them. Mr Almunia, the EU’s Economic and Monetary Affairs Commissioner, conceded that Britain’s budget deficit was only a little over the 3 per cent limit permitted to member states at the bottom of the economic cycle.

Mr Brown, however, had no excuse to run any kind of deficit. As Mr Almunia so damagingly noted, the UK has not been languishing in recession. Until the past few months, the economy has enjoyed several years of above-average growth.

If finances were being run properly and spending on pet schemes, as well as public services, had been kept under control, Britain should be running a comfortable surplus on current spending, if not overall. No statistical sleight of hand by Mr Brown, extending the economic cycle in both directions, can hide that. Mr Rato’s prescription is that Mr Brown must cut spending or raise taxes by 1 per cent of national income. That is virtually identical to the £12 billion tax rise that so many have told Mr Brown is needed to meet the spirit of his golden rule.

The last time Mr Brown clashed with Mr Rato, when the Chancellor chaired the key IMF committee, he frankly told the IMF that its forecasts were wrong and that the Treasury knew better. Since then the IMF has cut its forecast of UK growth from 2.6 per cent to

1.9 per cent, somewhat lower than Mr Almunia’s suggestion of 2.2 per cent. In theory, Mr Brown still believes, as he did in April, that the UK economy will expand by 3 to 3.5 per cent this year. This time, however, Mr Brown seems about to concede that he was wrong and the IMF correct, although he may not put it quite like that.

With the Labour Party conference next week, he is likely to be crafting a speech that taxes his grey matter more than any of the great events in Washington this week. That would lay the ground for formal revisions in the Pre-Budget Report in two months’ time.

Whatever or whomever the Chancellor tries to blame for this slide in Britain’s finances, it will not be his own arrogance. The steep rise in oil prices looks a strong candidate, with the odd lachrymose reference to America’s hurricanes. As Mr Almunia has noted, however, this has nothing to do with Britain running a higher deficit when it ought to be managing a surplus. In the short run, high oil prices help the Exchequer. Delusions do not. The message Mr Brown should give Labour ’s conference is the same as when the IMF last so prominently intervened: the party’s over.

Will Sir Gerry go in for kill?

IF DOUG FLYNN had not left Aegis in April this year, he would now be preparing to deal with a £1.57 billion takeover bid from Publicis, the French media group. He would know the value that was being put on the company and would be able to make the case, as his successor, Robert Lerwill, surely will, as to why the offer is not nearly generous enough.

Instead, Mr Flynn chose to leave Aegis in favour of becoming chief executive of Rentokil. There he finds himself having to try to defend the company against a non-bid from Sir Gerry Robinson. There is no offer on the table that Mr Flynn could decry as derisory, or grab as too good to refuse. There is only the vague suggestion that Sir Gerry fancies having a go at running Rentokil, in return for a hefty signing-on fee that could amount to £75 million.

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