Facing up to grim economic reality

All the more interesting, therefore, that when things look like going badly off the rails and the outlook for the coming months is for a much less healthy economy with a sharp fall in the growth rate, that it is nothing to do with him or his current Chancellor, Alistair Darling. Instead, Prime Minister Brown says the cause of our coming problems lies across the Atlantic in the US.

He can't have it both ways. The fact is that he was as much lucky as skilful in that he took over just as the terms of trade were swinging dramatically in Britain's favour thanks to the rise of China, and just as globalisation poured a cornucopia of riches into the financial sector, which benefited Britain more than any other major country. On top of that, the public finances were in remarkably good shape thanks to the hard work and fiscal framework set by his Tory predecessor Ken Clarke.

Still we all need a bit of luck, and he is not the first to claim the credit for being in the right place at the right time - captains of industry do so on a regular basis , as do the inhabitants of the City's trading desks, with for them more lucrative results at bonus time.

But Brown is on more dangerous ground in blaming what's ahead on America - for although the subprime crisis and the credit crunch have provided a trigger, the fact the British economy looks set to suffer is at least in part because of the weakening effect of the policies he has promoted.

These have two strands. First, much of the growth throughout the Brown Chancellorship was fuelled by debt - the country as a whole spending 105% of its income, and the building-up of that debt mountain at an individual level has left people overextended and far less able to cope with adversity now they can no longer borrow their way out of trouble.

Second, the story of the public finances is remarkably similar. Again, the Brown years have seen a move from near-balance to massive deficit, with the result that Government too is overextended and in no shape to cope with a downturn - hence all the panicky calls to public-sector employees to exercise wage restraint. Those sound so very 1970s, and may well have the similar perverse effect as 30 years ago of creating mass anger and industrial unrest while doing nothing to curb wage increases.

More to the point, the fact the public finances are in such bad shape means there is very little the Government, or by extension the Bank of England, can do to temper the cold winds. Normally, a government faced with a slowdown can combat it by increasing its own spending to create an alternative focus of growth in the public sector.

But there is no surplus money to spend - indeed, the Government is already having to borrowfar more than it bargained for, so there is nothing it can do on the fiscal front. It is a prisoner of its own weakness - or previous profligacy.

To make matters worse, its need for funds, and the fact the balance of payments is hugely in deficit and must be offset by inflows of currency for investment, combine to restrict the Bank's freedom to cut interest rates because of the possible adverse consequences in the capital and foreign-exchange markets if it cuts too vigorously.

What we are actually seeing is the unwinding of the paradox of Britain's economic performance in recent times. For some years now, I have felt there were two British economies existing side by side but showing quite different characteristics.

There was the one Gordon Brown always talked about where inflation was tamed, interest rates were at a 50-year low, growth was strong, unemployment was a thing of the past and we had never had it so good.

Then there was the other economy he never talked about - the one with failing schools, crumbling infrastructure, massive fiscal and balance-of-payments deficits, where an uncomfortably large part of the population lacked any of the skills needed to cope with the modern world. We had become little more than a hedge fund with a massive bet on the continued prosperity of financial services, and no plan B for when that growth stopped.

For his first 10 years, Brown basked in the superficial glow of the first, but now he and we have to face the reality of what has always lurked beneath.