Britannia Radio

The caravan moves on!  Today the battle commences based on 
yesterday's gamble with our futures.

To see a Rory Bremner video of : "Brown signs a deal with Satan" go 
to :-
http://playpolitical.typepad.com/political_comedy/2008/11/brown-signs-
a-deal-with-satan.html

xxxxxxxxxxxxxx   cs
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THE TIMES   25.11.08
Alistair Darling and George Osborne clash over £1 trillion debt gamble
Jenny Booth

The gulf between Labour and the Conservatives deepened this morning 
as Alistair Darling, the Chancellor, defended his $20billion plan to 
boost the economy as recession looms while George Osborne, the Shadow 
Chancellor, derided it as a massive and unjustified gamble.

The pair went head to head in a round of radio and television 
interviews, justifying their stance and trading blows from afar on 
who would be worse off once tax rises to pay for the stimulus package 
kick in.

Mr Darling said that it would be wrong to leave people to sink or 
swim like the Tories did in the recessions of the 1980s and 1990s - 
while Mr Osborne said that saddling the nation with £1 trillion of 
debt would hold back any future economic recovery.

"I think there was a big intake of breath by the nation when they 
realised what the cost of the last 10 years was and that we are all 
saddled with a truly huge debt," Mr Osborne told BBC Radio 4.

Minutes later, Mr Darling told the same programme: "I'm not prepared 
to just let the recession take its course. In the 1980s and 1990s 
people paid a high price for that, and I'm not prepared to go down 
that road again."

Mr Osborne claimed that lower and middle income families earning 
£19,000 or more would be worse off after a 0.5 per cent rise in 
National Insurance takes effect in 2011, but Mr Darling retorted that 
the Tories had got their sums wrong and that only people earning more 
than £100,000 would be affected.

The increase in the personal tax-free allowance for everyone earning 
less than £100,000 would make up for the higher NI contributions, Mr 
Darling said.

Questioned on the Today programme, he accused the programme of 
"running the Tory line", and insisted: "You have to look at the 
changes across the entire tax system."

Mr Darling acknowledged that, to pay for his fiscal measures, public 
borrowing would balloon to £118 billion in the next financial year, 
way above the £38 billion he forecast in March. But he brushed aside 
any suggestion that the British government was saddling itself with 
more debt than the economy could bear.

Asked if markets could absorb the additional gilts supply caused by 
his expanded borrowing, he said: "I'm confident we have made the 
right judgement, and the government can meet all its objectives and 
obligations."

The Conservatives have also complained that the House of Commons will 
not have an opportunity to discuss Mr Darling's fiscal stimulus 
package for more than a week, as Parliament is due to rise on 
Thursday and not return until the Queen's Speech on December 3.  
[They should not be surprised at this.  Brown treats parliament as an 
unnecessary irrelevance and sends it away on holiday whenever he can -
cs]
========================
TELEGRAPH Blog   25.11.08
Euro membership now impossible until at least 2014
Posted By: Edmund Conway

If there's one thing to be said for the atrocious public finance 
figures in the pre-Budget report it is that at least they will 
prevent us from joining the euro. There had been talk in recent weeks 
about Britain finally embracing the single currency, as sterling 
slumped to new lows against other world currencies and the plight of 
the UK economy took a general turn for the worse. Leaving aside the 
wisdom (or to be precise the utter lack thereof) in such a 
suggestion, following the PBR I doubt the euro members would even 
have us anymore.

Two of the strictures of euro membership are that a member country's 
budget deficit should not exceed 3pc of gross domestic product and 
that national debt should be below 60pc of GDP. The UK had been 
comfortably below these levels for most of the past few years, give 
or take the occasional budget deficit just above 3pc. However, under 
the new figures presented by the Treasury yesterday, we will remain 
ineligible for entry all the way through to 2014 or later.

They show that, after leaping to an unprecedented 8pc of GDP next 
year our annual budget deficit will remain well above 3pc all the way 
through to 2013/14, while the UK's total government indebtedness will 
smash through the European-recommended ceiling, rising from 43.2pc to 
68.5pc by 2013/14 (this is calculated on a Maastricht basis which 
measures gross government debt).

According to Stephen Lewis of Monument Securities: "With UK public 
finances running along current lines, it is doubtful whether present 
euro zone members would relish the prospect of UK inclusion in the 
zone. The danger that the UK would wreck the euro as it came so near 
to wrecking the [European Exchange Rate Mechanism] in 1992 would 
probably outweigh the political attractions of such an arrangement."
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TELEGRAPH   25.11.08
Darling's over-optimism misses the mark
The traditional criteria for judging budgets (and pre-budgets) have 
gone out of the window in the present crisis.

By Vince Cable, Liberal Democrat Treasury spokesman

A massive banking crisis and the nationalisation or part-
nationalisation of banks has made the concept of public borrowing and 
debt increasingly difficult to define meaningfully. There are also 
few reliable benchmarks for judging whether governments are too timid 
or too reckless until after the event. We have the history of the 
1930s and, more recently, Japan. But the truth is that the Government 
is largely flying blind - and in very dangerous weather.

There are two interconnected problems which the pre-Budget statement 
was designed to address. One is to counter the squeeze on the economy 
resulting from the contraction in credit in the wake of the - global 
- banking crisis. The recapitalisation of the banks was a necessary 
step but, so far, there is no sign of any revival, or even 
stabilisation, of "normal" lending. The second is the onset of 
recession triggered by the collapse of the grossly inflated UK 
housing market and by a generalised deterioration in consumer and 
business confidence.

What we now see unfolding is a deep recession, almost certainly 
deeper and longer than those official forecasts of a 1.25pc GDP 
decline next year followed by a rapid recovery in 2010.

The headline story is of a big increase in Government borrowing to 
around 8pc of GDP. This is what happened during the last recession 
under the Conservative government. Government borrowing is bound to 
rise during a recession. But the problems now are deeper. The 
Government's own figures show that even if there is early economic 
recovery and tight control of public spending, the public finances 
will be in seriously bad shape for half a decade or more.

But, in the short run, a stimulus is required to stop the downward 
spiral in confidence, deepening recession and growing unemployment. 
My worry is that there will be no early recovery mainly because there 
is now a deep structural problem in the banking system.

The banking crisis has left the banks disabled and unable, or 
unwilling, to maintain the flow of lending.  [But in fact the BBA 
claims that lent MORE not less to small businesses in October.  ??? -
cs] Enormous numbers of small and medium sized companies are having 
their credit lines cut, or made prohibitively expensive. When 
companies cannot pay their wages, they close - adding to the 
unemployed and worsening the demand spiral in the economy. To put 
this problem in perspective, Barclays has a balance sheet twice the 
size of the entire Government debt, and Royal Bank of Scotland is 
even bigger.

RBS has agreed to maintain lending flows to small companies but 
Barclays is severely cutting back and it will cut back even more 
after accepting large sums of money on extortionate terms from Arab 
institutions [in fact after tax the terms of 14% reduce to below 
government recapitalisation terms of 12%  -cs] . The Government has 
already put massive amounts of taxpayers' money into bank 
recapitalisations and guarantees. It must now ensure that promises to 
maintain lending flows are kept; otherwise the fiscal stimulus will 
be wiped out several times over.

The main tax cutting proposal - a small, temporary VAT reduction is 
not well targeted and consumers will realise that the tax cut will be 
claimed back from them in a couple of years time. That is why my 
party would much prefer a permanent tax cut aimed at low and middle 
income tax payers: a cut in the basic rate of income tax or lifting 
low earners out of tax altogether or both. The Government's planned 
£16 billion tax cut could have paid for a 4p in the pound income tax 
cut or its equivalent in increased thresholds. We now know that it 
will be paid for mainly by middle income families on incomes of as 
low as £19,000 a year on higher National Insurance.  [Darling 
contradicted Osborne when he said this would happen .  So the LibDem 
spokesman agrees with the Shadow chancellor -cs]

As for the 45p tax rate on incomes over £150,000, this is largely a 
token gesture. It will raise very little revenue and misses a major 
opportunity to rebalance the tax system in favour of greater 
fairness. The real issue, as any tax accountant knows, is that few 
really high earners pay anything like a marginal 40pc at the moment 
because of the generous reliefs and avoidance opportunities. It makes 
much more sense to tackle, for example, the glaring gap between top 
rates on income and capital gains tax, as Mrs Thatcher, and Nigel 
Lawson did in the late 1980s, or the extraordinarily generous 
treatment of very large pension pots.

My other major worry about the Government's package is that there 
will be little to show for all the borrowing. If the government's 
balance sheet is to be used to support the economy there should be 
long term public investment. The obvious area is housing. At present 
there is very little housing being built, social or private; the 
house construction industry is in desperate straights; and prices are 
plummeting. The government could, and should, mobilise the housing 
associations and councils to acquire land at present, heavily 
discounted, prices to move ahead with affordable housing projects 
which provide an economic stimulus and meet a real need. The 
Government has some ambitious rhetoric but very little is actually 
happening

I fear that this recession will be deeper, longer and nastier than 
the Government believes. We face a long, hard, painful grind.
========================
CONSERVATIVE HOME Blog 25.11.08
How the sketchwriters saw it

"It was a Christmas play like no other. Alistair Darling had cast 
himself as Santa Claus. This was, to say the least, a challenge for a 
man who is more wooden than Pinocchio's nose. Still, he came dressed 
for the part, his hair as white as the North Pole and clutching a 
brand-new socialist swagbag of goodies for all." - Ann Treneman in 
The Times
--------------------------------------
"Boring? Alistair Darling? Yesterday Britain's dreariest functionary 
had a swagger to him, a jaunty, hat-doffing, stick-twirling, marching 
down the prom quality. He looked like the man who broke the bank - if 
not at Monte Carlo, at least the one in Threadneedle Street." - Simon 
Hoggart in The Guardian
--------------------------------------
"While Mr Darling was on his feet, a group of four Tory frontbenchers 
- George Osborne, David Cameron, Oliver Letwin and on the bench 
behind them, David Gauke - conferred between themselves like a group 
of contestants on University Challenge who are confident they have 
the intellectual edge. When Mr Osborne rose to offer us the results 
of their deliberations, he proceeded to demolish Mr Darling." - 
Andrew Gimson in the Daily Telegraph
--------------------------------------
"Fifty-five minutes it took but a half-competent sub-editor would 
have boiled it down to two words: 'Abandon ship!' Things are dire. 
Gordon Brown kept rocking to and fro, hugging himself like one of 
those orphans in Romania." - Quentin Letts in the Daily Mail
--------------------------------------
"David Cameron sat there looking palpably anxious. Lips furled in. 
Brow knotted; or knitted possibly. George Osborne - his pale Regency 
features like a nasty Keats - sat beside him knowing his future 
depended on the next 90 seconds. Without a cheer in the first minute 
he'd be lost." - Simon Carr in The Independent
========================
IN BRIEF  25.11.08
==Debt to reach levels greater than in wake of Second World War
Britain will borrow more than £400 billion over the next five years, 
as the total stock of accumulated Government debt will peak at 57 per 
cent of GDP in 2013/14.  (Telegraph)

== King says banks may need more capital
Mervyn King, governor of the Bank of England, praised the £20bn 
government stimulus package but warned the 'single most pressing 
challenge' was to break the logjam in lending   (FT)

==Mortgage approvals halve in a year
Mortgage approvals fell by more than half from a year earlier in 
October, according to data from the British Bankers' Association, 
which underlined the extreme pressure on the housing market  (FT)

== Central and E Europe's growth forecast slashed
The global credit crisis is forcing a rapid slowdown in economic 
growth in the ex-Communist states of central and eastern Europe 
particularly in countries dependent on international financial flows, 
says the European Bank for Reconstruction and Development - (FT)

==OECD forecasts four quarters of contraction
The US and eurozone are poised to suffer four consecutive quarters of 
contracting output that will not end until the middle of 2009, 
according to the Organisation of Economic Co-operation and 
Development's latest forecast (FT)