Gordon under pressure over Northern Rock?

Last Modified: 17 Sep 2007
By: Gary Gibbon

The Chancellor of the Exchequer's promise to guarantee all deposits with the Northern Rock shows the pressure the Government is under not to let the credit crisis spread to other banks.

Gordon Brown's past stewardship of the economy has a lot to do with the Northern Rock crisis. That's David Cameron's message. Mr Brown may have guaranteed Northern Rock customers their savings but the aftershocks of this crisis could be profound, Mr Cameron argues because of Britain's debt levels.

David Cameron's team at Conservative HQ have decided they want to make sure that if the Northern Rock crisis spreads, Gordon brown cops the blame. The risk for the conservatives is that they look like they're feeding the panic in the high streets.

The political prize though could be great, the party that holds the mantel of economic competence is political king and the twists and turns of the marketplace can depose you in the space of a day.

As when the Tory Chancellor Norman Lamont announced the pound had fallen out of the European exchange rate mechanism. In the shadows - Norman Lamont's then adviser - David Cameron.

That was the day the Conservative party lost its reputation for economic competence. Labour has held a significant lead on economic competence in almost every poll since. Now both the Conservatives and the Liberal Democrats - at their conference in Brighton - see an opportunity to convince voters that Gordon Brown can't be trusted on the economy

Tomorrow the Chancellor will brief the cabinet on the Northern Rock affair and on tonight's dramatic policy u-turn. He's been forced to change government policy dramatically to stop the Northern Rock crisis turning into a meltdown which infects other - healthier - lending institutions.

The government desperately hopes that Northern Rock savers will now be reassured and go back home. Changing policy as dramatically as the government did tonight guaranteeing every single saver in the Northern Rock suggests it thought it might just be looking at the sort of crisis that can change the political terrain for a generation