The facts outlined below are enough to make your flesh creep.
Just take two sentences and contemplate what they mean:- - -
==The near-13pc budget deficit the EC calculates Britain faces next year is the worst in Europe, after Ireland's
==lumped Britain alongside Latvia and Ireland as seeing the biggest and most worrying increase in public debt levels in the coming years.
Ireland has an excuse - it was wrong to be in the euro and it is paying the price. Latvia - well - Eastern Europe has had great geo-political problems for a long time.
We have no excuse at all and all Brown is doing is making a crisis into a catastrophe by spendthrift behaviour and deliberate borrowing. With this he has bought a temporary false dawn as people with mortgages have never had them so cheap! The day of reckoning gets nearer as that second hand goes round!
And just for the record that weirdo who so successfully runs Ryanair has given his expectations today, saying that there was “at least another year to go" of the recession. "I think the US will emerge in 2010, Europe in 2011 and Britain and Ireland after that because their borrowing is much worse.”
Christina Speight
TELEGRAPH
24.6.09
1. Britain chided by Brussels for ballooning government deficit
Britain has been censured by Brussels for the size of its budget deficit and ordered to bring it back under control imminently.
By Edmund Conway, Economics Editor
The European Commission has urged the Chancellor to start attempting to cut projected levels of government debt from next year – sooner than is projected in the Budget.
The call echoes those from the International Monetary Fund, Standard & Poor's and others that the UK must put its books back in order as soon as possible.
And in a further embarrassment for Alistair Darling and Gordon Brown, the Commission lumped Britain alongside Latvia and Ireland as seeing the biggest and most worrying increase in public debt levels in the coming years.
In its latest assessment of the UK, it said: "Taking into account the probability of a worse-than-expected deterioration in the UK's budgetary position in the near term and the heightened risks to fiscal sustainability, there is a need for a more ambitious consolidation effort in the medium term."
The near-13pc budget deficit the EC calculates Britain faces next year is the worst in Europe, after Ireland's. The Commission added that the UK, along with Ireland and Latvia, were facing "deteriorations of public finances... reminiscent of some of the most severe fiscal implications that systemic banking crises have had in the past".
The Bank of England's policy of quantitative easing is showing "encouraging" signs of working, its chief economist, Spencer Dale, said. He said it had helped lift the growth of broad money in recent months, and kept yields from rising even higher.
2. The UK economy's crunch will take years to fix
The cloudy skies over the UK might seem to have broken.
By Ian Campbell, Breakingviews.com
British homeowners who have not lost their jobs are 25pc better off than a year ago, according to Ernst & Young. The Council for Mortgage Lenders is less pessimistic about home-loan arrears and repossessions.
But these rays of sunshine should not blind investors to a UK credit crunch that shows few signs of easing.
The chinks of light do matter. They are the difference between recession and depression. And they reflect huge support from the authorities. The government has provided £200m to protect homeowners from repossession and to encourage lenders to be flexible. The Bank of England has cut interest rates to just 0.5pc. Homeowners do not need to find much money to meet interest payments alone.
Ultra-low interest rates are also the main source of improvement for many Britons’ finances. E&Y says lower mortgage, fuel and energy costs mean the average household today has £1,075 to spend each month after fixed outgoings, against £859 a year ago. But this money is more likely to be saved than spent. Falling house prices have hurt homeowners’ finances, making them less creditworthy and keen to pay down debt.
The banks, meanwhile, are not increasing their lending in spite of huge government intervention in the sector. Gross mortgage lending in April was the weakest since December 2000, according to the BoE. The CML forecasts gross mortgage lending of just £145bn in 2009 – 40pc of the 2007 level and the lowest since 2000.
For UK businesses, things are no better. April’s lending to businesses was the worst since June 2000, according to the BoE. Neither the housing market, nor the economy as a whole, can be expected to recover when borrowing remains so constrained.
The UK is mired in a credit crunch that will take years to fix, not months. That gives the government a problem. It cannot rely on recovery to alleviate a deficit soaring towards an unsustainable 13pc of GDP. The state seems certain to be forced to cut public spending or raise taxes before the upturn comes. And those cuts, unlike the BoE’s, will be painful not palliative.
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