People who say it will be all over in 2010 may be right globally but
here in Britain the world’s worst finance minister, Gordon Brown, has
ensured that it will take much much longer to sort it out.
Meanwhile if you read the interview Cameron gave to the Sunday
Telegraph it is clear that Cameron hasn’t the first idea what to do
about it.
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SUNDAY TELEGRAPH 7.9.08
Gordon Brown policies 'piling up budget deficit'
By Edmund Conway, Economics Editor
Gordon Brown has left the public finances heading for a budget
deficit almost as large as the one that triggered the 1970s
International Monetary Fund bail-out, financiers have warned.
Britain will have to borrow some £90?billion within two years as the
full effect of the economic slump takes its toll on the Government's
accounts. At 6 per cent of the country's economic output, it would be
the biggest deficit since the early 1990s, when the Conservative
government was forced into highly embarrassing and politically-
damaging tax increases.
The warning comes after the head of Britain's biggest mortgage
provider predicted that Britain's credit crunch would last for at
least another 18 months.
Economists said it was conceivable that the budget deficit would come
to rival the 7 per cent shortfall generated by Denis Healey in 1975,
after which Britain had to go to the IMF for emergency funding.
The gloomy forecasts underline the scale of the economic and
budgetary crisis facing the Prime Minister and Alistair Darling as
they approach next month's Pre-Budget Report. It comes a week after
the Chancellor warned that the present economic challenges facing
Britain are the worst for 60 years.
Economists said that it also showed how little room the Government
had to cut taxes in the face of an anticipated recession. Michael
Saunders, the chief European economist at Citigroup, said Britain
already had the worst structural deficit of the leading
industrialised economies. This would worsen significantly as the
wider economy deteriorates. In a downturn, tax revenues disappoint
and the Government has to spend more on unemployment benefits.
He said: "Just look at what happened in the early 1990s. The deficit
was one per cent [of gross domestic product] in 1990. By 1993 it had
jumped to 7.3 per cent.
"It can swing so dramatically in a downturn, and that is what will
happen this time around. I expect the Government to borrow £70
billion next year with this climbing to £90?billion in 2010."
As Chancellor, Mr Brown was repeatedly warned by the IMF and the
Organisation for Economic Co-operation and Development to cut back
borrowing or risk an even bigger crunch when the economy slowed.
Experts say such a scenario has now come to pass.
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