Brown's fiscal sums are not adding up

London Briefing: Gordon Brown is starting to get a bad press. The Chancellor has led a relatively charmed life since he took office in 1997: the economy has behaved impeccably, he has hit his fiscal targets and he has taken great credit for the original decision to grant independence to the Bank of England.

Economics undergraduates taking courses in the theory of the business cycle must wonder what all the fuss is about. There hasn't been an economic downturn in Britain for nearly 13 years. What cycle? Mr Brown, of course, claims much of the credit for this.

Even the increasingly bitter fights with Prime Minister Tony Blair have rarely reflected badly on Mr Brown, notwithstanding the attempts by some to paint the Chancellor as "psychologically flawed". Most people accept that a deal was done by the two men - Mr Blair promised to hand over power at some point and Mr Brown eventually got stiffed.

But there is now a growing sense that Gordon is moaning just a bit too much. Many of us agree that he might have got the raw end of the deal but this is politics and he should get over it. The latest row has been inspired by a book that looks suspiciously ghost written by "friends of Brown".

And there have now been too many public rows. Westminster outsiders are, by this stage, thoroughly bored by a spectacle that borders on the childish. There are even one or two suggestions that Tony might grow a backbone and get rid of his notoriously prickly neighbour.

This is most unlikely this side of the general election but the one decision that everybody will eagerly await will be the job offered to Gordon - if any - in the first cabinet of the third New Labour administration.

Mr Brown's real problems are far more mundane, however. It is becoming increasingly clear that his fiscal sums are, for the first time, failing to add up. The authoritative Institute for Fiscal Studies hit the headlines last week with estimates that taxes will have to rise (or spending be cut) to the tune of £12 billion after the election.

Other independent economists have been chiming in with guesses of their own, but most credible sources seem to point to a number around that produced by the institute.

Few people are astonished by any of this, although the scale of the likely problem has raised one or two eyebrows. The spending boom unleashed by the Chancellor over the past three years has had a number of predictable effects. Some hospital queues have been cut and some teachers have been hired, but all of this has come at an exorbitant cost and zero reform of the provision of public sector services.

It seems likely that Labour will stick to its previous electoral pledges and promise not to raise tax rates. This merely guarantees a further acceleration of stealth tax increases, with National Insurance likely to take the strain.

In one of the most dishonest economic moves in years, Mr Brown raised the rate of National Insurance contributions by a full percentage point, effectively boosting the marginal rate of income tax to 41 per cent. But he still claims to have stuck to his promise not to hike taxes.

Having got away with it once, I imagine they believe that they can do so with impunity at any time in the future.

All of this, by the way, highlights the dilemma facing the Tory party: its ability to make credible promises of tax cuts is heavily circumscribed by the fiscal arithmetic it will inherit in the very unlikely event of a surprise Conservative election victory.

Mr Brown rightly takes credit for handing over the setting of interest rates to an independent Bank of England. The depoliticisation of monetary policy has made an enormous contribution to the stability of the British economy. And the Bank of England framework for interest rate setting is often held up as a global benchmark, which the European Central Bank always fails to meet.

Given this degree of monetary success, the looming problems over fiscal policy and the sheer dishonesty of the framework within which tax and spending decisions are taken, it is no surprise to see calls for a similar handing over of fiscal matters to independent experts.

This might leave the Chancellor with little to do, but it might ensure a few more years before our students of business cycles realise that history can, in fact, repeat itself.

• Chris Johns is an investment strategist with Collins Stewart. All opinions are personal.