Even if he would rather have the job of his neighbour Tony Blair, Gordon Brown evidently loves his work. He deserves to do so. His strategy has worked superbly so far. Now, on the brink of a general election, he presides over a healthy economy and bursting coffers. He is able to sprinkle largesse on the causes - from children to churches - that take his fancy. His opponents gnash their teeth. But they find it almost impossible to take a big bite out of the chancellor's well-protected shins.

As Mr Brown enjoyed informing the nation on Wednesday, the British economy now enjoys the lowest inflation for 30 years, the lowest long-term interest rates for 35 years, more people in work than ever before and the lowest unemployment since 1975. Last year the economy grew by 3 per cent. This year, despite the expected downturn in the world economy, the Treasury forecasts growth at between 2¼ per cent and 2¾ per cent.

This combination of steady growth with low inflation and low unemployment has been the Holy Grail of economic policy for a generation. Mr Brown's success in achieving it owes much to the reforms of the Conservative governments that preceded him. But he can claim to have built mightily on their achievements.

Behind the achievement has been the new framework for monetary and fiscal policy. The decision to make the Bank of England independent has been a spectacular success. His fiscal rules have also allowed him to impose discipline on his party. This has led it to the promised land, where fiscal health lives side by side with largesse.

The strategic success must be recognised. It raises two questions: the first is whether it will continue; and the second is whether it is being wisely used.

The overall fiscal position is very strong, with a cyclically adjusted public sector net borrowing requirement of minus 1.4 per cent of gross domestic product (a surplus) for 2000-01. This, it should be noted is 0.9 per cent of GDP better than forecast in the last Budget. At that time, cyclically adjusted net borrowing was forecast to decline from minus 1.2 per cent of GDP in 1999-2000 to minus 0.5 per cent this year. In the event, there was only a tiny decline of 0.2 per cent of GDP from the outcome for 1999-2000. Thus the fiscal expansion between the two years was less than 30 per cent of the planned expansion.

On the face of it, the government is now planning a dramatic fiscal loosening, with cyclically adjusted borrowing for 2001-02 still planned to be minus 0.3 per cent of GDP, as announced in the Budget last year. The shift between the two years is now 1.1 per cent of GDP. Thereafter, the pattern is much as before, with the emergence of a deficit of 1.1 per cent of GDP by 2003-04.

This forecast was one of the chief points of recent criticism by the International Monetary Fund. Its argument was that the plan was far too expansionary. In an economy with an underlying trend growth rate of perhaps 2½ per cent, this seems persuasive. The government's net stimulus this year would amount to 40 per cent of a normal year's growth. Since the Treasury admits the economy is operating at slightly above trend, one would expect overheating, in the absence of a tight monetary stance.

Thus the Treasury does seem to be planning an ill-timed fiscal expansion. Note that this is also entirely consistent with all the fiscal rules: the current budget is expected to be in significant surplus throughout the planning horizon, while net debt falls just below 30 per cent of GDP by 2002-03 and stays there.

The Treasury has a counter-argument. It is that outperformance vis-a`-vis expectations is built into the cautious forecasting framework. Yes, the Budget implies a net cyclically adjusted expansion of more than 1 per cent of GDP. But last year's Budget implied an expansion of 0.7 per cent of GDP, which turned out to be only 0.2 per cent. This sort of thing could happen again.

Whether the fiscal expansion will end up as big as now forecast is unknown. But even though it shifts the balance between monetary and fiscal policy unfavourably, this should not be disastrous, unless the economy turns out to be operating far further above long-term capacity than now seems at all plausible.

If the success should last, is the chancellor using it wisely? In broad terms "yes", but in detail "no", is the answer. A Labour government's priorities are the core public services and redistribution.

There were moments on Wednesday when the chancellor appeared to be home secretary and secretaries of state for employment and education, for the environment, for trade and industry, for social security and for health, all rolled into one. This impression was not accidental. Nor is it undeserved.

Mr Brown's achievement is not just to demonstrate that Labour can run the economy. It is to give his party a chance to show that it can achieve its objectives for the public services and redistribution. In the first term, he laid the foundation. The next parliament will show what Labour can build on it.