It may not be tax and spend exactly, but it’s definitely tax and borrow.

For the best part of 12 years, Labour has pursued essentially conservative (with a small ‘c’) economic policies, steadily underburdening itself of the ‘fiscally unreliable’ tag that some earlier Labour administrations were (wrongly or rightly) saddled with.

And for most of the past 12 years, as the global economy steadily expanded and Britain’s along with it, with aggregate wealth rising smoothly, Labour looked strong at the helm each time the budget came around.

But since the global economic crisis hit in late 2007,  it has become much harder for the government to keep a tight rein on the fiscal strings as growth has taken a hit, unemployment has risen sharply, and tax receipts have declined. 

Last April’s budget was a tough one for Labour, but Wednesday’s budget may well go down as the one that really showed the government reeling as it tries to keep a grip on the purse strings in some of the most challenging economic circumstances imaginable.

The numbers tell the story and are in some cases eye-bogglingly huge.

Finance minister Alistair Darling says the government will have to borrow 175 billion pounds this year and almost as much next year (173 billion) as it tries to plug a widening gap in its finances. WIth the Debt Management Office already struggling to raise funds (if one recent debt auction is anything to go by), the borrowing requirement could be a very big ask.

At the same time, tax receipts as a proportion of gross domestic product are going to be down, Darling said, and growth is set to contract this year at the fastest rate since World War Two with unemployment edging relentlessly higher.

To try to boost government revenue, Darling has unveiled a new income tax band, although it’s unclear just how much can really be raised from taxing the richest 1-1/2 to 2 percent of the population an ever larger portion of their income.

From next April, those earning more than 150,000 pounds a year will have to pay 50 percent tax, while their benefits allowances will steadily be cut, as they will be for those earning more than 100,000 pounds.

Those new tax policies represent something of a bust for Labour. For 12 years they’ve kept on the right side of business and the wealthy, encouraging entrepreneurship and positioning themselves as a partner with business. But the new top rate of tax suddenly begins to look like a Labour policy of old —  a “tax-the-rich” gambit.

It remains to be seen how the Conservative opposition – now widely expected to win the next election, which has to be called by June 2010 – respond, but on the face of it the high borrowing and higher taxation would seem to play ever more into their hands politically, while threatening them with a dire economic legacy should they win the next election.

For Darling, it may be the best that can be done with an awful hand. Maybe the borrowing can be met, the spending measures announced will have the desired effect, kickstarting economic activity and getting the wheels of commerce turning. Maybe. But it’s a slim chance will little more than a year to go before an election.

Borrowing and taxing may be what’s needed (or the only means available) to try to right the economy in this uncertain time, but it’s unlikely to help Labour’s prospects of holding onto power.

Be careful this week about buying wholeheartedy into any G20-related spin about supposedly savvy, free-spending Britain and America doing more to combat the world economic crisis than supposedly stubborn, overly cautious Germany and France. The actual figures show it is much more complex than that.

A Reuters calculation on discretionary fiscal stumuli and the International Monetary Fund's assessment show that, if anything, Britain is the significant laggard and that German spending almost matches the United States over the next two years. Here are the IMF's numbers (% of GDP):

                                                          2009                     2010

 Germany                                             1.5                       2.0
 France                                                 0.7                      0.7
 UK                                                      1.4                     - 0.1
 US                                                      2.0                       1.8

Just to add to the complexity, discretionary spending estimates do not include bank bailouts (which would boost UK and U.S. anti-crisis spending numbers)  But nor do they include automatic economic stabilisers such as existing social welfare schemes and safety nets (which would boost Germany and France versus the U.S.  where such things are rare to non-existant).

There is bound to be some squabble over who is doing what when the G20 starts on Wednesday. Just remember the numbers.

(Reuters photo: Juan Medina)

A major survey has found that women are more responsible with money than men. They’re less likely to get into debt and they work hard to become financially independent.

The global Reuters Synovate survey polled some 4,500 women in 12 countries about money matters. An equal number of men were also asked several questions related to finances.

It’s true enough that the rogues’ gallery of bankers now being pilloried in the media for personal greed and financial failure is almost exclusively male.

But who melts all the plastic in the High Street? Surely Sophie Kinsella’s book “Confessions of a Shopaholic” was such a success because it struck a chord with so many women.

Do you think women are more intelligent than men when it comes to money matters?

Prime Minister Gordon Brown has suggested he will push expansionary fiscal policies to help boost the economy. Brown’s comments were the latest in a series from him and Chancellor Alistair Darling stressing the importance of boosting the economy, which shrank in the third quarter of 2008 for the first time in 16 years and is expected to contract more sharply next year.

Bank of England Governor Mervyn King has also put his weight behind “some fiscal stimulus”, just as the Bank predicted in its quarterly inflation report that the economy would shrink sharply next year.

But what is the way forward - tax cuts or higher public spending?

The dividing line between Brown and Tory leader David Cameron is whether to borrow to fund tax cuts. Cameron has argued that Britain’s deficit is too high to allow further borrowing. Brown says Cameron’s claim that he can pay for his tax cut by savings on welfare benefits isn’t realistic.

Tax cutting is a populist measure and it may be tempting for Brown, who no longer appears to be married to fiscal prudence, to go down that road, not least because of the backlash he faced earlier this year over scrapping the 10 percent tax band.

But there are a number of reasons why tax cutting may not result in a boost to the economy: government borrowing gets dangerously high and will limit the economy’s ability to recover swiftly from a recession, and people may decide to save rather than spend any extra money they might have in their pocket due to tax cuts.

What’s your view - do you think increased public spending will stoke demand, are tax cuts the way forward to boost the economy or should the government go for a mix of both?

In these hard times, those whose job it is to part us from our money in the shops are beginning to describe the retailing experience as a family activity, a way of relaxing — absolutely nothing to do with conspicuous consumption, you understand.

The word “luxury”, we are told, sends the wrong message nowadays and is being quietly phased out of promotional material. Bling is over.

Rory Sutherland of advertising agency Ogilvy even predicts there will be a trend towards the modest lifestyles reputedly favoured by Lutherans and Swedes.

What do you think? Do you believe the credit crisis will have any lasting impact on people’s attitudes when it comes to the relentless pursuit of material gain?

Or will we be back melting plastic in the shops as soon as the “all clear” siren is sounded?

These days, “keeping up appearances” has less to do with the pompous Hyacinth Bucket (or should that be “Bouquet”?) of the British sitcom of the same name, more to do with “bling” and extravagant spending by the younger generation.

A survey of 1,619 consumers, commissioned by mobile banking service Monilink, found that 71 percent of 16 to 34-year-olds admitted secretly competing with their friends in the purchase of “luxury” products — cosmetics, gadgets, clothes and the like. Image concerns are the key driver of this “bling-itis”. Over half (56 percent) of those questioned say they believe people are judged on appearances and possessions in modern British society, rather than personality.

That has fuelled a level of spending that is problematic at best, severely damaging at worst. More than 60 percent are still paying off credit card debts from “bling-itis”-driven luxury purchases from 2006 and 2007; over a fifth say they have so much debt from non-essential spending that repayments are a “significant” strain; and around the same proportion admit they find it hard to keep track of spending and make ends meet.

Perhaps even more worryingly, young Britons associate spending with personal happiness, and value short-term luxury over longer-term financial security. Some 55 percent of 16 to 34-year-olds purchase goods simply to make themselves happy and “feel down” if they don’t get the opportunity to buy goods regularly. Meanwhile, 72 percent state that a good lifestyle in the short-term is “considerably” more important than making savings in case of an emergency (27 percent). Top areas of spending to achieve this “good lifestyle” are holidays (27 percent), drinking and going out (21 percent), clothes (19 percent), gadgets (12 percent), home improvement (10 percent), cars (8 percent) and jewellery (3 percent).

If only they’d listen to the Janet Jackson and Luther Vandross hit of 1992: the best things in life are free.

The Friday night take-away, Saturday shopping spree and summer get-away are in line for the chop, as consumers become increasingly nervous over looming recession. Almost nine out of 10 Britons say they will cut spending on non-essential items to cushion themselves against impending economic downturn, according to a poll of 1,000 people for Web site Fool.co.uk.

A British institution — the good old take-away — is set to receive the biggest blow, with over two-thirds of the nation planning to cut back on curries, fish suppers and late-night kebabs, the survey says. Other planned cutbacks include retail therapy (67 percent) and fewer holidays (49 percent), while 12 percent plan to stop smoking, 4 percent to put pension contributions on hold and 3 percent say they will even cut their kids’ pocket-money.

This is just the latest in a string of evidence pointing to dwindling consumer confidence and increased uneasiness over the state of the global economy. It is, of course, important not to talk ourselves into recession: unnecessary doom and gloom will only serve to exacerbate the situation, something that those with a vested interest in the property market remaining buoyant have long maintained.

But Britons are surely feeling the pinch. The latest figures from Philip Hammond, shadow Treasury chief secretary, reveal that the disposable income of the average working family has dropped to 25,900 pounds today from 26,200 pounds in 2006, and personal debt in the UK is growing at an unprecedented rate — one million pounds every five minutes.

With the cost of living rising while disposable income falls, consumers must feel like they are being squeezed from all sides: failure to make hay while the sun was shining could soon come back to haunt them. It is reassuring, then, that reality is finally hitting home. During a recession, cash is king. And those with the leanest budgets will be best placed to survive.