Things are changing albeit with funereal pace. It is progress of a
sort that the News of the World notices that something rather
unpleasant is going on. But in general the public remains in denial!
I then turn to two press reports from the News of the World and the
Sunday Times which uses a Conservative Home report.
I will save the most important comments of the day from the Sunday
Telegraph from Michael Fallon MP and other items for a separate
posting later
xxxxxxxxxx cs
========================
NEWS OF THE WORLD
========================
NEWS OF THE WORLD
Banks in 30 alerts while Lloyds is on the brink
lerts, while Lloyds is on the brink Saturday, February 14
A STAGGERING 30 official warnings over ten years were made about the
perilous state of Britain's banks before they collapsed-but the
Government failed to act.
City watchdog the Financial Services Authority repeatedly raised the
alarm before juggernauts including HBOS, RBS and Northern Rock
crashed. But Gordon Brown said he had no idea of the warnings.
An explosive report from the Bank of England as far back as 1997,
when he was Chancellor, slammed the City bonus culture.
The revelations show the Government failed to spot warning signs that
could have stopped the melt-down.
THE Government's bail-out has failed to kick-start bank lending,
Shadow Business Secretary Ken Clarke said yesterday. Just eight per
cent of small businesses say their banks are using a new scheme to
lend more cash.
...........................................................
LLOYDS Banking Group is days away from being nationalised, costing
the taxpayer billions of pounds, City experts said last night.
It is on the verge of collapse after HBOS - taken over by Lloyds last
year - notched up a staggering £10 billion loss.
The Government already owns 43 per cent of the new bank and
Chancellor Alistair Darling has refused to rule out full
nationalisation. Last night, when Lib Dem Treasury spokesman Vince
Cable was asked if Lloyds could be nationalised next week, said: "The
group is very close to the edge."
Taxpayers have already sunk £17 billion into the two banks. Shadow
Business Secretary Ken Clarke said the merger had turned into a
"disaster"
========================
SUNDAY TIMES 15.2.09
[nb NOT featured on web index, but buried in Business News. No wonder
the public is still in denial! -cs]
Britain faces £100bn cut in spending according to 'Bankrupt Britain'
report
David Smith and Robert Watts
BRITAIN faces years of painful adjustment as a result of the debt the
government has taken on in the financial crisis, a report says.
Bankrupt Britain, written by City experts,* says taxes will have to
rise and the level of public spending will have to be cut by as much
as £100 billion to put the government's finances back into shape.
Its author, Malcolm Offord, a City fund manager with more than 20
years' experience with Charterhouse, looked at the UK economy from
the perspective of an investor considering putting money into a company.
Working with colleagues, he calculates that in the absence of
government action, the national debt will balloon to more than 150%
of gross domestic product over the next 10 years, compared with
Labour's "ceiling", now breached, of 40%. The priority, he says, is
to reverse the "profligate" spending that gave Britain an
unacceptably big budget deficit at the start of the recession.
Reducing debt, the paper says, will require cutting the level of
public spending by £60 billion by 2014 and £100 billion by 2020.
Public spending is £623 billion this year, with a third going on
social security.
Tax rises would also be needed, the paper says, focusing on an
increase in the top rate of tax to 50%. But raising taxes too much
would be self-defeating, hitting economic growth.
A poll for The Sunday Times today shows the Conservatives have
maintained a 12-point lead over Labour as doubts about the
government's handling of the economic crisis grow. The poll details
are bad for Gordon Brown. His approval rating has slumped 22 points
since November, with only 31% of people thinking he has done a good
job as prime minister.
Nearly half, 48%, fear that they or a member of their close family
will lose their job, while slightly more think David Cameron and
George Osborne would do a better job handling the crisis than Brown
and Alistair Darling.
Other experts warn that the public finances are facing an immediate
black hole, with the equivalent to tax rises of up to 12p in the
pound on income tax needed to close the gap.
Martin Weale, director of the National Institute of Economic and
Social Research, said: "We see a shortfall of £60 billion relative to
[the chancellor's] numbers."
On Wednesday the Office for National Statistics will publish analysis
of how the government's finances performed during January.
Jonathan Loynes, chief European economist at Capital Economics, said:
"We're running out of adjectives to describe the state of the public
finances, but suffice to say that things are still getting much worse."
---------------------------------
* Conservative Home which is responsible for the report above
comments today- - -
Key findings from "Bankrupt Britain"
The characteristics of a sensible fiscal position: "As a rule of
thumb, a well-run country would be characterised by government
borrowing not exceeding 40% of GDP, a budget deficit of zero over the
economic cycle (Gordon Brown's now abandoned "golden rule") but where
public spending did not exceed tax receipts by more than 3% of GDP in
any given year (the Maastricht Treaty rule)."
Britain is hurtling away from a sensible fiscal position: "In his Pre-
Budget Report on 24th November 2008, the Chancellor Alastair Darling
announced that he was planning a budget deficit of 8% of GDP in
2009-10... The Treasury does not plan on bringing the budget deficit
down to the Maastricht target of 3% until 2014... If we add the
initial £77 billion of financial stability measures taken by the
Treasury to deal with the fall-out from the recent banking crisis
(Bail-Out I) this figure rises further to £973 billion - 65% of GDP."
Worse than the 1970s: "The biggest single annual budget deficit since
1970 was recorded in 1993-94 at 7.7% of GDP; compare and contrast
this with the 2009-10 projection of 8% of GDP (which was calculated
before the two Bank Bail-Outs and the rapid deterioration of the
economy in the last three months)."
Britain is haemorrhaging tax revenues: "Tax receipts are now in free
fall. To put this in context, in their peak year of 2007-08, tax
receipts from the financial and housing sectors alone combined to
contribute £60 billion to the Treasury. The Chancellor's forecast
that tax receipts in the worst forecast recession since the War will
fall only by £10 billion is likely to be unrealistic. For reference,
tax receipts fell by 6.4% of GDP (£94 billion in today's money) in
the last boom-to-bust cycle from 1985 to 1994... "City bonuses have
been slashed, financial sector and company profits are collapsing,
the property market has stalled, capital gains are non-existent,
savings rates have slumped, VAT has been reduced, the price for North
Sea oil has fallen - and the list goes on. HMRC must be haemorrhaging
tax revenues."
The consequences of a 5% recession: "If we assume that in 2009-10, UK
GDP falls by 5% overall in real terms, we think that "business as
usual" levels of public spending and taxation would lead to national
debt (on the Maastricht definition) rising to around 105% of GDP by
2012 and continuing to rise thereafter to 156% of GDP by 2020."
Public spending has soared over the last fifteen years: "The first
point to note is that current Total Managed Expenditure (TME) of £623
billion has grown over 15 years by 5.4%pa from the equivalent figure
in 1993/94 of £283 billion. This is a long-term trend of real
spending ahead of inflation: if TME had grown over 15 years in line
with actual inflation of 2.4%pa during that period, current TME would
amount to £404 billion. On that basis, we have increased real
spending by £219 billion over the last 15 years."
A STAGGERING 30 official warnings over ten years were made about the
perilous state of Britain's banks before they collapsed-but the
Government failed to act.
City watchdog the Financial Services Authority repeatedly raised the
alarm before juggernauts including HBOS, RBS and Northern Rock
crashed. But Gordon Brown said he had no idea of the warnings.
An explosive report from the Bank of England as far back as 1997,
when he was Chancellor, slammed the City bonus culture.
The revelations show the Government failed to spot warning signs that
could have stopped the melt-down.
THE Government's bail-out has failed to kick-start bank lending,
Shadow Business Secretary Ken Clarke said yesterday. Just eight per
cent of small businesses say their banks are using a new scheme to
lend more cash.
...........................................................
LLOYDS Banking Group is days away from being nationalised, costing
the taxpayer billions of pounds, City experts said last night.
It is on the verge of collapse after HBOS - taken over by Lloyds last
year - notched up a staggering £10 billion loss.
The Government already owns 43 per cent of the new bank and
Chancellor Alistair Darling has refused to rule out full
nationalisation. Last night, when Lib Dem Treasury spokesman Vince
Cable was asked if Lloyds could be nationalised next week, said: "The
group is very close to the edge."
Taxpayers have already sunk £17 billion into the two banks. Shadow
Business Secretary Ken Clarke said the merger had turned into a
"disaster"
========================
SUNDAY TIMES 15.2.09
[nb NOT featured on web index, but buried in Business News. No wonder
the public is still in denial! -cs]
Britain faces £100bn cut in spending according to 'Bankrupt Britain'
report
David Smith and Robert Watts
BRITAIN faces years of painful adjustment as a result of the debt the
government has taken on in the financial crisis, a report says.
Bankrupt Britain, written by City experts,* says taxes will have to
rise and the level of public spending will have to be cut by as much
as £100 billion to put the government's finances back into shape.
Its author, Malcolm Offord, a City fund manager with more than 20
years' experience with Charterhouse, looked at the UK economy from
the perspective of an investor considering putting money into a company.
Working with colleagues, he calculates that in the absence of
government action, the national debt will balloon to more than 150%
of gross domestic product over the next 10 years, compared with
Labour's "ceiling", now breached, of 40%. The priority, he says, is
to reverse the "profligate" spending that gave Britain an
unacceptably big budget deficit at the start of the recession.
Reducing debt, the paper says, will require cutting the level of
public spending by £60 billion by 2014 and £100 billion by 2020.
Public spending is £623 billion this year, with a third going on
social security.
Tax rises would also be needed, the paper says, focusing on an
increase in the top rate of tax to 50%. But raising taxes too much
would be self-defeating, hitting economic growth.
A poll for The Sunday Times today shows the Conservatives have
maintained a 12-point lead over Labour as doubts about the
government's handling of the economic crisis grow. The poll details
are bad for Gordon Brown. His approval rating has slumped 22 points
since November, with only 31% of people thinking he has done a good
job as prime minister.
Nearly half, 48%, fear that they or a member of their close family
will lose their job, while slightly more think David Cameron and
George Osborne would do a better job handling the crisis than Brown
and Alistair Darling.
Other experts warn that the public finances are facing an immediate
black hole, with the equivalent to tax rises of up to 12p in the
pound on income tax needed to close the gap.
Martin Weale, director of the National Institute of Economic and
Social Research, said: "We see a shortfall of £60 billion relative to
[the chancellor's] numbers."
On Wednesday the Office for National Statistics will publish analysis
of how the government's finances performed during January.
Jonathan Loynes, chief European economist at Capital Economics, said:
"We're running out of adjectives to describe the state of the public
finances, but suffice to say that things are still getting much worse."
---------------------------------
* Conservative Home which is responsible for the report above
comments today- - -
Key findings from "Bankrupt Britain"
The characteristics of a sensible fiscal position: "As a rule of
thumb, a well-run country would be characterised by government
borrowing not exceeding 40% of GDP, a budget deficit of zero over the
economic cycle (Gordon Brown's now abandoned "golden rule") but where
public spending did not exceed tax receipts by more than 3% of GDP in
any given year (the Maastricht Treaty rule)."
Britain is hurtling away from a sensible fiscal position: "In his Pre-
Budget Report on 24th November 2008, the Chancellor Alastair Darling
announced that he was planning a budget deficit of 8% of GDP in
2009-10... The Treasury does not plan on bringing the budget deficit
down to the Maastricht target of 3% until 2014... If we add the
initial £77 billion of financial stability measures taken by the
Treasury to deal with the fall-out from the recent banking crisis
(Bail-Out I) this figure rises further to £973 billion - 65% of GDP."
Worse than the 1970s: "The biggest single annual budget deficit since
1970 was recorded in 1993-94 at 7.7% of GDP; compare and contrast
this with the 2009-10 projection of 8% of GDP (which was calculated
before the two Bank Bail-Outs and the rapid deterioration of the
economy in the last three months)."
Britain is haemorrhaging tax revenues: "Tax receipts are now in free
fall. To put this in context, in their peak year of 2007-08, tax
receipts from the financial and housing sectors alone combined to
contribute £60 billion to the Treasury. The Chancellor's forecast
that tax receipts in the worst forecast recession since the War will
fall only by £10 billion is likely to be unrealistic. For reference,
tax receipts fell by 6.4% of GDP (£94 billion in today's money) in
the last boom-to-bust cycle from 1985 to 1994... "City bonuses have
been slashed, financial sector and company profits are collapsing,
the property market has stalled, capital gains are non-existent,
savings rates have slumped, VAT has been reduced, the price for North
Sea oil has fallen - and the list goes on. HMRC must be haemorrhaging
tax revenues."
The consequences of a 5% recession: "If we assume that in 2009-10, UK
GDP falls by 5% overall in real terms, we think that "business as
usual" levels of public spending and taxation would lead to national
debt (on the Maastricht definition) rising to around 105% of GDP by
2012 and continuing to rise thereafter to 156% of GDP by 2020."
Public spending has soared over the last fifteen years: "The first
point to note is that current Total Managed Expenditure (TME) of £623
billion has grown over 15 years by 5.4%pa from the equivalent figure
in 1993/94 of £283 billion. This is a long-term trend of real
spending ahead of inflation: if TME had grown over 15 years in line
with actual inflation of 2.4%pa during that period, current TME would
amount to £404 billion. On that basis, we have increased real
spending by £219 billion over the last 15 years."
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