Figures - figures - figures! The one thing that is almost certain is
that they’ll all be wrong though Darling appears to have been
deliberately and cynically wrong! He was just trying to get through
his speech before people realised that!
Having established that point (!) one must look very closely at
anything relating to Britain’s economy coming out of Brussels, for
the EU is engaged in a systematic campaign to downgrade London as the
EU’s economic powerhouse in favour of Paris-Frankfurt.
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DAILY MAIL 5.5.09
Alistair Darling's rose-tinted forecast that Britain's economy will
rapidly return from bust to boom was dealt another blow last night.
The European Commission downgraded its predictions for the UK -
saying it expected output to shrink by 3.8 per cent in 2009.
It said Britain would remain in recession for the first half of 2010,
with 'slight positive growth' not returning until late next year.
Overall, the commission said, growth for the year would register just
0.1 per cent.
It also predicted that mass unemployment would return to Britain,
with almost one in ten people out of work. That would mean more than
three million unemployed.
If correct, the gloomy forecast would mean Labour going into a
general election with no sign of economic growth returning to the
economy.
Ministers are pinning hopes of a political recovery on being able to
point to green shoots by next May, when Gordon
Brown is expected to go to the country. In last month's Budget, the
Chancellor confidently claimed the recession would end this year -
with 1.25 per cent growth in 2010 and a startling 3.5 per cent in 2011.
Even under that scenario, branded 'dishonest' by the Tories and the
Lib Dems, it will take until 2018 before the public finances are
brought back into balance.
The EU forecast said there was a strong 'likelihood that economic
activity in 2010 will be weaker than envisaged by the UK authorities'.
It said this would add to a 'very significant' deterioration in the
public finances. Mr Darling announced an extra £700billion in
borrowing over the next five years to plug the gap in public finances
as tax receipts plunge and spending on unemployment benefits and
stimulus measures rises.
But the commission said a steeper fall-off in tax take from
previously booming areas such as the housing and financial sector -
as well as the lower level of economic activity - could push the
Government's debts close to 85 per cent of national income by 2010/11.
That is a level more usually associated with 'basket case' economies
such as Italy.
The report says the 27-nation EU and the 16 countries that use the
euro currency will shrink four per cent this year - far ahead of its
previous forecasts.
According to the commission, some other eurozone countries will be
even harder hit than the UK this year, with Germany's economy
contracting 5.4 per cent and Italy's by 4.4 per cent.
Ireland's crisis-hit economy is forecast to shrink by nine per cent
this year. Howard Archer, an economist at IHS Global Insight, said:
'The European Commission's forecasts will make pretty unpleasant
reading for the government, as they are significantly worse than
those in Mr Darling's recent budget.'
He added that things may even turn out a bit worse than the
commission forecasts.
Tory Treasury spokesman Philip Hammond said: 'Yet another impartial
commentator is discounting Alistair Darling's projections for the UK
economy as grossly optimistic.
'Until our Government recognises the size of the hole we're in, and
finds the courage to stop digging, we will not get Britain back on
the path to sustainable growth.'
A Treasury spokesman said: 'The unexpected depth of the global
recession towards the end of 2008 and start of this year has led to
significant downward growth revisions for all the major economies by
forecasters, including the IMF and European Commission.
'As a result of the decisive fiscal, monetary and international
policy action taken, the Government expects growth to return towards
the end of the year.'
============================
TELEGRAPH 5.5.09
Chancellor's bullish projection of 1.25pc growth.
The Commission said that "the likelihood that economic activity in
2010 will be weaker than envisaged by the UK authorities" will
compound a "very significant" deterioration in public finances.
It expects UK unemployment to rise to 9.4pc by 2010 leaving 3m
workers jobless.
"The UK economy is now clearly experiencing one of its worst
recessions in recent history," the EC said. It expects GDP to decline
3.8pc this year and projected that growth will remain negative for
the first three quarters of 2009 followed by two quarters of "virtual
stagnation and only a gradual return to slight positive growth by
late 2010".
Timothy Kirkhope, the Conservative leader in the European Parliament,
dismissed the Chancellor's forecasts as "pure fantasy".
The outlook formed part of a wider warning from the EC that the
economies of the 16 eurozone countries will shrink 4pc this year,
double the decline it estimated only four months ago. Unemployment is
expected to soar to 11.5pc by the end of next year, which equates to
the loss of 8.5m jobs. However the EC reckoned the end of the worst
recession in the post-war period is close, with the economy set to
stabilise in 2010.
The EC now expects a small decline in 2010 compared with its January
forecast of 0.4pc growth, echoing more pessimistic forecasts from the
IMF and the OECD.
The EC expects the region's average budget deficit to widen to 6.5pc
in 2010, three times the gap in 2008. The UK's budget deficit is seen
ballooning to 13.8pc by 2010.
Eurozone inflation is expected to slow to 0.4pc this year before
accelerating to 1.2pc in 2010, which remains below its 2pc target rate.
European markets shrugged off the forecasts as shares hit a 16-week
high. France's CAC 40 index added 2.5pc while Germany's DAX gained
2.8pc. The euro gained 0.6pc against the dollar to hit $1.334.
The EC described the risk of a deflation scenario as "limited".
However a report compiled by BDO Stoy Hayward posited that eurozone
businesses see deflation as a real risk. BDO said that the UK appears
to have seen off the threat of deflation and should recover quicker.
Peter Hemington, partner at BDO, said: "Quantitative easing looks to
have paid off so far for the Bank of England. As a result, the euro
remains at too high a level and the eurozone is suffering."
Ulrich Leuchtmann, a currency strategist at Dresdner Kleinwort-
Commerzbank, said traders would focus on the European Central Bank
meeting on Thursday when a rate cut of 25 basis points appears to be
a fait accompli.
Mr Hemington said: "By accepting now that devaluation of the euro is
a necessary evil to ensure eurozone countries can grow their way out
of the recession, the ECB may be able to hasten recovery."
Shadow Treasury minister Philip Hammond said: "Until our Government
recognises the size of the hole we're in, and finds courage to stop
digging, we will not get Britain back to sustainable growth."
Tuesday, 5 May 2009
Now the EU slams Alistair Darling's rapid economic recovery forecast
By JAMES CHAPMAN
EC demolishes Alistair Darling's recovery forecasts
Alistair Darling's rose-tinted forecasts of an economic recovery in
Britain by 2010 have been demolished by the latest projections from
the European Commission.
By Nic Fildes
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