This is a swing of £25bn from the black into the red.Mr Berlusconi, being right of centre, is closer to the inconsistency of the British Conservatives, who are also claiming to be able to cut taxes without being able to show how they can cut spending to match. The Labour problem is a mirror image of that of the Conservatives. They want to increase spending without also increasing taxes. A return to public borrowing looks harmless enough at the moment, but the amount could rise sharply if there were to be a slowdown in the economy.Mr Brown was furious with the Commission for even daring to criticise his plans. With Britain outside the euro, the Commission does not have the same authority as in Italy's case.
Yet if Mr Brown wants to join the euro admittedly a big if he will have to get used to playing by the rules.The point of the EU Growth and Stability Pact is that countries should aim for their government budgets to be in surplus, or at least in balance, in normal times. Then if they are blown off course, for example by a world recession, the deficit has room to increase without breaching the 3 per cent limit.Mr Brown has come up with a different wheeze, called the Golden Rule. This says that it is all right for the public finances to be in deficit as long as it is to finance investment. The Government is, it so happens, carrying out a badly needed increase in public investment of about 1 per cent of national income about £10bn over the next four years This does not justify suspending financial caution. There is nothing sacred about building new hospitals as opposed to recruiting more nurses, which is not covered by the Golden Rule.Britain has traditionally patronised Italy for being a political and economic basket case. Now that Italy has shown that it can match our performance, it is no time to be setting a bad example to a country that could yet derail the euro if Mr Berlusconi's ministers fail to hang on to his coat-tails.Christopher Johnson is UK adviser to the Association for the Monetary Union of Europe.
Contact johnsonc globalnet.co.uk. Here he comes - a plain-speaking Yorkshireman, straight from central casting, to chair Railtrack. And the first issue in the agenda is what to do about t' brass. Here he comes a plain-speaking Yorkshireman, straight from central casting, to chair Railtrack.
