Chancellor's luck may run out as economic tide gets set to turn

London Briefing: Gordon Brown has one attribute (and probably only one) that we can all envy: he is lucky. This time last year he was widely derided for being far too optimistic with his forecasts for the UK economy in 2004.

With a projection of 3.25 per cent growth, the Chancellor was way above the consensus forecast and most of us wrote him off as just another politician who had fixed the Treasury's economic model to suit his own ends.

Today, of course, Mr Brown smiles smugly and heaps scorn on the forecasting community for getting it so wrong. His claims for prescience, however, should be taken with a liberal pinch of salt. There is so much luck involved in forecasting that most of us, even when we get it right, do not tempt fate by claiming too much credit.

If the UK had a credible opposition, we would see the Chancellor on the defensive: if you were able to call the overall economy so accurately, Mr Brown, how come your forecasts for public sector borrowing were so hopeless? After all, once you have some accurate guesses about growth, surely you can make some pretty good forecasts for government spending and tax receipts? But, the UK does not have a credible opposition, so we see the Chancellor making one untenable claim after another - and being allowed to get away with it.

We now have the bizarre situation where we all know that taxes have to rise after the next election. But Mr Brown denies this and nobody mounts an effective challenge.

Mr Brown made two good decisions as Chancellor. In 1997, immediately after the election, he made the Bank of England independent and announced he would stick to the previous Tory government's spending plans for the next two years. After that, he reverted to type and became a traditional tax-and-spend Labour Chancellor.

Those two early decisions sowed the seeds of the economic stability that we have enjoyed over the past seven years, just as Mr Brown's more recent decisions are laying the ground for renewed instability in the years ahead.

No wonder there have been no protests from the Chancellor's supporters about Tony Blair's reported plans to move Mr Brown to the Foreign Office after the general election. All those tax rises to come can be laid at the door of Mr Blair.

The Brown faction might even claim that higher taxes would not have happened if their man was still at the Treasury. At the very least, he won't be the one announcing the tax hikes.

For the record, Mr Brown is forecasting another bumper year for the economy. In the recent pre-budget report, he suggested a likely growth rate of 3-3.5 per cent - why he couldn't just repeat his 3.25 per cent forecast is beyond me. He may be right but somehow I doubt it. It may even prove to be the year that Mr Brown's luck runs out.

If the downturn in the housing market develops into something serious - as looks increasingly likely - the UK consumer will stop spending, blowing Mr Brown's projections apart.

Lots of other things could go wrong of course, not least the world economy, but the domestic Achilles' heel is the property market.

Even if the Chancellor is forced to admit that he isn't that good at forecasting after all, it remains to be seen whether this will do him any political damage. The Tories are incapable of landing any punches on him, even when he is standing two feet away from them with all defences down.

The biggest threat to the Chancellor's ambitions lies within his own party. Ever so quietly, his enemies are mounting an "anybody but Gordon" campaign in the race to succeed Mr Blair. One of the founding members of that campaign appears to be Mr Blair himself: his decision to cut Mr Brown out of most of the election planning process is the most overt snub delivered so far.

There is a very obvious way for Mr Blair to discredit Mr Brown. The Prime Minister should leave Mr Brown as Chancellor after the election. As the UK economy slows, revealing the damage that growth has so far manage to conceal, Mr Brown will have a lot of explaining to do - not least about all of those taxes that he will have to raise. Hardly an auspicious start to his campaign to lead the Labour Party - and the country.