Britannia Radio

TELEGRAPH Blogs    23.1.09
1.(at 1031 hrs) Gordon Brown: Denial is a river in Egypt
Posted By: Iain Martin

Who is advising Gordon Brown on what line to take on the crisis? They 
must be telling him to change tack and he won't budge.
His performance when he was interviewed by Evan Davies on Radio 4's 
today programme this morning was quite bizarre.

Because he is psychologically incapable of a "hands up moment" he 
cannot say: look, I have regrets, I made some mistakes, I might have 
let elements of the boom run too far for too long, but I'm determined 
to deal with a real national emergency. It's my responsibility.

Instead, total denial is fast corroding what is left of his Prime 
Ministerial authority. He sounds detached from reality.

"It's international". It started in America. All the while the 
implication that he, Brown, could not have done a single thing 
differently.
Will we get growth this year?! "It depends..." It depends! That's an 
understatement.

Asked by Davies about five times: do you regret declaring the end of 
boom and bust? He said: "This is a different problem. It's totally 
different from the inflation related problems we had in the past." He 
wouldn't even acknowledge the relevance of the words boom and bust, 
never mind say them.

Surely nobody advising the PM can think his blanket denial of any 
responsibility for the nation's economic crisis is doing him or the 
government any good? Given the seriousness of the country's 
predicament, it's also becoming quite disturbing to listen to.
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2.(at 1206 hrs) Heading for the worst year since 1921?
Posted By: Edmund Conway

Which do you want first: the good news or the bad? Let's take the bad 
first since it is really very bad indeed. The final quarter fall in 
UK gross domestic product was far nastier than most economists had 
expected. Not only is it worse than anything we've experienced since 
1980 (yes, worse than any three-month period in the 1990s) such 
weakness is likely to persevere for some time. Indeed - that 1980 
fall of 1.8pc came at the peak of the recession which began in 1979; 
this recession, on the other hand, has only just begun.

The economy is likely to shrink for the entire year, and is rather 
likely to contract somewhat thereafter. While some - particularly 
from the Government - are likely to dismiss the Office for National 
Statistics as a mere confirmation of what we knew for some time (and, 
to be fair, a recession has seemed likely since relatively early last 
year) even they cannot ignore the severity of the slide. A look at 
the figures show that not only were sectors such as financial and 
legal services hit by the crisis in the final quarter of the year, 
the manufacturing sector had an even worse collapse, with industrial 
output down by 3.9pc. In fact, every sector but agriculture and 
farming suffered a contraction (good news that we are finally 
starting to buy British, though!) and there is little hope for much 
of a recovery later in the year. Unemployment won't peak for another 
year or so, so the feel-bad factor is sure to intensify as the months 
go by as well.

What scares me is that it is not inconceivable that we have another 
three or four quarters with contraction just as nasty. This really 
could line us up for the worst year of growth (or lack thereof) since 
the 1921 National Strike [ahem!   The General Strike was in 1926!]. 
Although much attention will be paid to the fact that the UK's 
situation is even worse than in most European nations and other G7 
rivals, let's not overstate matters. The recessions in Germany and 
France are likely to be similarly severe as the UK's, though the 
Brits may well pip this one in terms of nastiness and length. But 
however reassuring it may sound at first that others are facing a 
similar storm, don't forget that the UK will not recover properly 
until others overseas have. That's because the remedy for this 
recession is exports. But even the weakened pound - down to around 
$1.35 today, the weakest since 1985 - cannot do much good if no-one 
overseas wants our goods.

Anyway, enough bad news, time for the good. The retail sector saw 
sales rise by far more than expected in December, according to the 
official stats. Growth of 1.6pc was a full percentage point more than 
even the more optimistic forecasts. Granted, the rise in volumes was 
not matched by a similar rise in value since retailers were forced to 
slash prices. Nevertheless, this thin silver lining suggests that 
despite all the noise to the contrary, the cut in VAT may well be 
having a little bit of effect - and this should persevere as the year 
unfolds.

Unfortunately, and it is one final piece of bad news, most economists 
suspect there is something slightly unreliable about the ONS retail 
figures, so I wouldn't put too much emphasis on them. Sorry!
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ECONOMIC 'Shorts'   23.1.09

TELEGRAPH
=Northern Rock 'to get £10bn'
Northern Rock could get up to £10bn from the Government to ramp up 
new mortgage lending.

TIMES
=Geithner currency 'manipulation' accusation angers China - China has 
responded angrily to an accusation of currency "manipulation" by 
Timothy Geithner, the new US Treasury Secretary

=Barclays shares plunge 18 per cent
Value of the bank's stock dives below 50p in a week where the 
Government revealed a new bailout for UK lenders

=RBS economists lambast Rogers 'doomsday' rant
City economists say the Quantum Fund co-founder exaggerated and 
lacked rigour in saying the UK economy is washed up  [Look who's 
talking! -cs]

FINANCIAL TIMES
=Eurozone companies slash jobs as recession bites
The eurozone's plunge into deep recession is leading companies to 
slash jobs at an ever faster rate even though the speed of the 
downturn has eased, a closely-watched survey has show