Business View: Stick to your guns, Gordon

As Gordon Brown steps up to the dispatch box on Wednesday, he could be forgiven for seeking inspiration from a famous Callaghan. Not James, the former Labour Chancellor and Prime Minister, but "Dirty" Harry, who said: "You have to ask yourself one question: Do I feel lucky?"

Well Gordon, do ya? Because, if you feel lucky, you're not going to raise taxes in any significant way in the Autumn Statement. Nor are you going to cut your spending plans. You are going to borrow the money and spend away. And you will argue that you will not breach your golden rule ­ the one that says you can only borrow for capital projects and not to cover wages for nurses, the police and the firefighters ­ because a recovery in the economy will bring in the tax revenues to sort out the £7bn or so shortfall.

This position is not as laughable as some economists might have us think.

The scenario that the Chancellor will set out this week will be bleak; he will have to climb down from the overly bullish stance on the economy he set out in the Budget and he will have to admit there is a real problem with declining corporate tax receipts, which fell 28 per cent in October versus a year ago.

And while it would be foolish to ignore the bad omens that are all around, Gordon may be right to sit tight and do nothing pre-emptive now. By March, when he unveils the real Budget, he will know how far off course he is and will be in time either to raise taxes or corral public spending.

The waiting game has great risks, mostly political, but it also has great advantages. First off, the firefighters' dispute will be over, one way or the other, and Gordon will have a decent idea of the wage demands that will be lying in wait from other public sector employees.

More important, he may be able to see some signs of recovery in the economy, and some signs of an uptick in tax revenues. The dreadful October figures are being seen by some experts as the dark before the dawn. As taxes are paid in arrears by corporations, the tax revenues lag the economy, so maybe we've seen the worst of the damage to corporate profits.

Of course there are all sorts of potential factors to derail any recovery. There are the dire problems in the US economy and, perhaps more important, Germany's awful woes. And then there is the potential war with Iraq and a possible spike in oil prices. But all that will be clearer by March as well. Gordon has shown himself to be the iron Chancellor, the prudent Chancellor and, most recently, the caring Chancellor. Is it time for the lucky Chancellor to emerge?

Well, is it, punk?

A former boss of mine used to say: "Never look for conspiracy before you have ruled out the other two 'c's, coincidence and cock-up." Of course there is an amendment to this rule. When dealing with France, head straight for conspiracy.

So consider this. France Telecom takes on massive amounts of debt and runs into trouble. The French government is unable to bail it out and it cannot sell its mobile phone business, Orange, because of the market conditions. So it stumbles on in a weakened state.

Vivendi Universal takes on massive amounts of debt and runs into trouble. It looks to sell assets to sort itself out, one of the most attractive being a holding in Cegetel, a rival to France Telecom and Orange. The obvious buyer is Vodafone, a tough rival and another Cegetel shareholder, which agrees to buy the stakes in Cegetel held by everyone else.

So, curiously, Vivendi decides it is going to bid for the bits of Cegetel that Vodafone has agreed to buy. And how can it pay for this? By selling its interests in Vivendi Environmental, a boring utility.

In the midst of this, a buyer crops up for some of Vivendi Environmental that Vivendi Universal owns. Electricité de France, the state-run utility. Of course EdF thinks these assets are a fantastic investment, especially when it is being groomed for privatisation.

Or could it be another French fix?

j.nisse@independent.co.uk