London Briefing: This column has often expressed its admiration for the UK's economic flexibility, particularly when compared to our continental cousins. Different parts of the economy are more flexible than others of course. Londoners, particularly those working in financial markets, can be forgiven if they sometimes look with a jaundiced eye on the rest of the country.
Economists are forever lecturing the Europeans about their lack of labour market flexibility. In the City of London that flexibility is all too apparent. Salaries might be high, occasionally beyond the dreams of avarice, but job security is about zero. I've never seen any research into this, but I'll bet that we would be astonished by the high proportion of successful, fully employed City types who have been fired at least once in their careers.
In the industrial heartlands, once you lose your job that tends to be that. The City is much more like the US, where getting the sack carries no social stigma and opportunities for other jobs are plentiful. Most of the time anyway.
Most of us put the relative success of the UK economy in recent years down to the earlier painful reforms enacted during the 1980s by successive Thatcher-led governments. Structural reform is always very difficult, not least because its beneficial effects sometimes take years to come through.
On this line of thinking, Gordon Brown is the luckiest chancellor ever: he has simply been able to bask in relatively fast growth, full employment and low inflation thanks to measures taken long before he took office.
Just as the benefits of structural reform take a long time to show up, it could be that when those reforms are gradually unwound, the consequences may be invisible for a good while. I recall making a presentation on the UK's economic and financial prospects to a group of senior banking executives and, when faced with my usual optimism about the inherent strengths of the system, an ex-Tory cabinet minister said: "Just wait, when Brown's anti-reforms work their way through the system, the life will be crushed out of the private sector."
These arguments left me with an uneasy feeling, notwithstanding their source.
Historians should never make forecasts, particularly about the economy. Niall Ferguson, one of the UK's most prominent intellectual exports (he now teaches at Harvard) disobeys most of the rules and has just made some startling claims about Britain's economic prospects. In so doing, he has laid into Gordon Brown in a way that must have made even our very thick-skinned chancellor feel some pain.
Ferguson implicitly condemns those, like this columnist, who mistake London for Britain. In fact, he argues that the capital has never been less British: he sees a peculiar mixture of "Londhattan and Londonistan".
The former comparison is the one that I am fond of making: the way in which London can match or exceed anything that Wall Street does. "Londonistan" for the welcome that we give, still, to the weird and wayward characters rejected by most other European countries.
Ferguson goes on to claim that Brown's tax and spend policies have given rise to regional economies in Wales, Scotland, the north of England and (particularly) Northern Ireland that have all the hallmarks of "virtual Soviet republics". Without state support, these socialist homelands, he argues, would collapse as there is precious little private sector activity. All entrepreneurial talents are being crushed under an ever more burdensome state.
Strong stuff indeed. Inevitably, he overstates his case. My home town of Cardiff, for example, has a thriving private sector and a distinctly un-Soviet feel. But I have to acknowledge that the government there is a bigger employer than it should be.
Ferguson is angry because he thinks Brown has been given a free ride by the benign global economy, dumb luck and the ability to intimidate critics. The ferocity of Ferguson's condemnation must give anyone pause for thought.
But is he right? Only time will tell. One potential tipping point could come from avery old fashioned source: the electorate.
Ferguson rightly points out that real expenditure on health and education is up 60 per cent and 40 per cent, respectively, since Brown and Blair first took office. These are huge and extremely tangible increases. Have we seen commensurate improvements in health and education? Not even close.
Chris Johns is an investment strategist with Collins Stewart. All opinions are personal.
