Alistair Darling: Beating Back Disaster
Underhill, William, Newsweek International
Byline: William Underhill
We used to talk 15 years ago about returning to full employment; people would laugh. We have made huge strides.
The timing of Alistair Darling's latest promotion was, at the very least, unlucky. A year ago he took over Britain's finances as chancellor of the Exchequer from Gordon Brown and, within weeks, the outlook for the British economy--once seen as a model performer in Europe--had darkened. With soaring oil prices, rising inflation and the credit crunch, an IMF report last week praised the country's record but cut its growth forecast for 2008 to 1.4 percent. In London, Darling spoke with NEWSWEEK's William Underhill. Excerpts:
UNDERHILL: By any standard, it's been a tough first year for a chancellor. Looking back, do you see the job as a poisoned chalice?
DARLING: If you wanted an easy life, you wouldn't be chancellor of the Exchequer. I chose to be here--and I'm very happy to be here.
This time last year the prime minister said the economy was in "as good as shape as could be" to weather the economic storm. Does that confidence seem justified now?
We are not complacent, but I think Gordon was quite right. Last year, this was the fastest-growing economy in the G7. Unemployment is as low as it's been since the mid-'70s. Although inflation is rising now, it's historically at a much lower level than we have seen in the past. In the '70s, it was in the high 20s [as a percentage] at one stage.
But your critics say that in the good times, your government failed to make provision for the future?
It's simply not true. If you look at the level of debt we inherited from the Conservatives in 1997, we have reduced it quite dramatically. At the same time we managed to triple investment in public services. And the same people who now criticize us were, in the past, urging us to spend more and more, not less and less.
Rightly or not, Gordon Brown acquired a reputation for economic competence as chancellor. Do you think, in light of today's economy, that's now diminished?
No, I don't. The IMF report says yet again that over the last 10 years of strong growth we have been able to build up many of the public services on which the economy depends. …