Britannia Radio

This by a French economist working for the IMF in an interview with a 
French newspaper will hardly be welcomed in Downing Stret (10 or 11)  .

Then the economists are beginning to agree generally that Darling's 
forecasts a mere month ago were wildly optimistic.

Then  look at the desperation in Timms's attempt to account for the 
latest figures.  Time and again he is desperate to make out that 
other countries are involved .  It's the spin doctors' official line!

xxxxxxxxxxxxx cs
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BBC ONLINE  23.12.08
IMF criticises the UK's VAT cut

An International Monetary Fund (IMF) economist has criticised the 
UK's 2.5-percentage-point cut in spending taxes.

Olivier Blanchard, the IMF's chief economist, said that the temporary 
cut in VAT would not significantly influence shoppers' behaviour.

In an interview with French newspaper Le Monde, Mr Blanchard said he 
did not think the cut was "a good idea".

He also reiterated the IMF's call that governments should be ready to 
spend more to stimulate their economies.

Mr Blanchard's comments were seized on by Britain's opposition 
Conservative politicians, who have argued against the effectiveness 
of the VAT cut.

Shadow chancellor George Osborne described Mr Blanchard's remarks as 
Prime Minister Gordon Brown's "nightmare before Christmas".

Conservative leader David Cameron has previously warned that the UK 
cannot afford to borrow to provide the funding for the temporary cut, 
which is due to remain in place until January 2010.

'Exceptional crisis'
In his interview, Mr Blanchard said: "Temporarily cutting VAT, a 
measure that was adopted in Great Britain, does not seem to me to be 
a good idea - 2% less is not perceived by consumers as a real 
incentive to spend."

In contrast, he said a French plan aimed at encouraging consumers to 
buy cars was a good idea.

Mr Blanchard re-stated the IMF's position that governments should do 
more to stimulate demand if the world was to avoid a depression 
similar to that of the 1930s.
"We are faced with a crisis of exceptional size, of which the biggest 
component is a collapse in demand. Consumer and business confidence 
indexes have never fallen so far since they began. The coming months 
will be very bad," he said.

"It is imperative to stifle this loss of confidence, to restart 
household consumption, if we want to prevent this recession 
developing into a Great Depression."

Stimulus urged

Mr Blanchard called on Germany, in particular, to boost its spending 
in the next few months.
"If Germany did not participate sufficiently in this stimulus, many 
other countries would also hesitate to do so and the effect would be 
disastrous for Europe," he said.

The German government has said it will review its stimulus programme 
in January, to see if more spending is necessary.

Most governments of the world's major economies have announced 
stimulus plans in recent weeks, amid mounting gloom, but the IMF has 
repeatedly warned that the packages do not go far enough.
The IMF has said countries should be prepared to spend up to 2% of 
the world's gross domestic product in their plans to boost economic 
growth.

However, Mr Blanchard warned that even more money might be needed.
"If the circumstances require it, states must be ready to do more - 
3% or more if necessary - we must think about it now because it is 
not easy to spend such large sums of money efficiently."

Commenting on Mr Blanchard's remarks, shadow chancellor George 
Osborne said: "This is Gordon Brown's nightmare before Christmas. One 
of the most respected and senior economists in the world has just 
said that Gordon Brown's temporary VAT cut, the centrepiece of his 
plan for the recession, is not a 'good idea'.
"The recession is getting deeper, and Labour is bankrupting Britain 
again."
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EVENING STANDARD   23.12.08
Buy, buy 2008: next year we're going for broke
Hugo Duncan and Jonathan Prynn

Britain will plunge into the deepest downturn since 1947 next year, 
economists warned today.

The gross domestic product is now expected to fall by 2.5 per cent, 
worse than any time since the austere post-war era.

There are also predictions that property prices will drop for two 
more years to 35 per cent below their peak - negative equity for 
millions but a golden opportunity for first-time buyers when combined 
with low interest rates.
But the economic slump is good for shoppers as retailers are being 
forced to slash prices, with the West End enjoying record figures.

The latest verdict from the City on the depth of the downturn came 
from Jonathan Loynes, chief European economist at Capital Economics. 
He said a fall of 2.5 per cent in GDP next year would be as big a 
contraction in a single year as the entire course of the last 
recession in the early Nineties.

The pound fell today as investors speculated that the Bank of England 
will cut interest rates again next month to shore up the economy. 
Sterling later recovered to stand at 1.059 euros, up 0.1 of a cent. 
Official figures today showed the economy shrank 0.6 per cent in the 
third quarter of this year - a bigger fall than the 0.5 per cent 
originally thought. This revision fuelled speculation that the 
Treasury will have to downgrade the economic forecasts it made one 
month ago.

Gordon Brown has privately hinted that government forecasts of a 
swift recovery in the second half of next year may prove optimistic, 
largely due to the growing realisation that the banking crisis has 
been worse than predicted.

Ministers are also preparing for major job losses after Christmas 
with unemployment set to rise from 1.86?million to three?million. 
Despite the massive turnout of shoppers over the past few days, more 
retail chains are expected to follow the fate of Woolworths.

Government sources believe that Alistair Darling will revise his 
figures in the spring Budget to show that the downturn has been 
grimmer than he suggested in the pre-Budget report last month.

The Chancellor admitted the UK economy will shrink next year, 
forecasting contraction in gross domestic product of 0.75 per cent to 
1.25 per cent. The actual figure now looks set to be even worse. 
Matthew Sharratt, economist at Bank of America, said: "It really does 
paint an exceptionally gloomy picture about the speed with which the 
UK economy has lapsed into recession."
Output in the manufacturing sector fell 1.6 per cent between July and 
September while the services sector, which makes up four fifths of 
the UK economy, shrank by 0.5 per cent.

Howard Archer, chief UK economist at Global Insight, said: "While the 
GDP data still do not show the UK technically into recession yet, as 
defined by two successive declines in quarter-on-quarter GDP, we are 
entering into it big time in the fourth quarter."
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POLITICS HOME    22.12 08
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Sky News at 11:36
Timms: Economy contraction figures "poor, though not surprising"

Stephen Timms, Financial Secretary to the Treasury

Mr Timms said that figures released today showing further contraction 
of the economy were "poor, though not particularly surprising".

On the new figures showing that the economy had contracted by 0.6% 
between July and September he said, "This is a poor figure, though 
not a particularly surprising one.  [Well it's worse than forecast! -cs]

"We need to be working with other countries [# 1]  to navigate a way 
out of these difficulties.

"It is clear that the next year is going to be a difficult one in the 
economy in the UK, and the rest of the world. [# 2]

"There undoubtedly will be an upturn, precisely when it will occur is 
something we can debate.  [Forecast was mid 2009 but nobody believes 
that one now -cs]

"On borrowing we are at the beginning of this downturn in a 
relatively strong position [What about those other countries better 
off than we are because they didn't start with massive deficits -
cs] . We are able to do the borrowing necessary to support the 
economy through these difficult times.

"Our focus is on navigating a path through these difficulties that 
gets us through them in the best possible shape."

11:44 BBC News

Asked about the possibility of the government offering financial 
support to Jaguar Land Rover Mr Timms said:

"Any company approaching the government for help would need to meet 
some quite stiff tests before any help was provided.

"It was absolutely right for us to support the banking system as we 
did in October. We took decisive action to stabilise the system. I 
think when you're looking at individual companies the issues are 
rather different."