Two more items here of the continuing crisis. One I couldn’t find online was the news that Northern Rock goes from bad to worse - much worse!
The Telegraph reports on its business front page “Northern Rock losses to mount” - half year in excess of £500m in breach of specially relaxed regulatory rules - despite \special waiver from FSA - FSA continues to let it write mortgages and take deposits despite 1/3rd of its mortgages being in negative equity. regulators don’t rewghulate in Brown’s world!
Christina
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TELEGRAPH 2.7.09
Recovery may not be sustainable, CBI warns
Richard Lambert, the director general of the CBI, said on Wednesday that the British economy was “undergoing a massive course of steroids” but it was not clear yet where sustainable growth would come from once the medication has worn off.
By Angela Monaghan
Speaking in London at Politeia, the social and economic forum, he said the drivers behind potential recovery – including monetary and fiscal stimulus – were temporary in nature and the worry therefore was that they would not provide a basis for long-term recovery. Mr Lambert added that businesses are worried about a number of uncertainties, including the weak state of the credit markets and the public finances. “Monetary and fiscal easing can’t go on forever,” he said.
He cited the damaged credit markets, the inevitable fiscal squeeze and the uncertain outlook for household spending as reasons “why there is a real question as to whether the green shoots which everyone has been spotting lately will turn out to have any sustainable roots”.
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POLITICS HOME 2.7.09
Cable: Government will cut council funds by at least 10%
Local councils face a "savaging" of funds in coming years due to the poor state of the public finances, Vince Cable has warned.
He said that on the govenrment's own figures, cuts of at least 10 per cent in central funding were likely, and it was time for an honest debate about how to protect local public services.
Speaking at the conference of the Local Government Association today, Mr Cable said councils could not escape the effects of the squeeze on spending.
"Local government will not be spared the consequences of the financial crisis. If past experience is anything to go by, Central Government will be only too eager to pass on the pain in the form of reduced support grants," he said.
"Even the Government’s, perhaps optimistic, profile for public spending is likely to leave local government facing a 10% cut in central funding, perhaps more, as well as revenue pressures from increased arrears on council tax less opportunity for capital receipts and parking income and spending needs for homeless families, together with a savaging of capital spend.
He called for candour from central government over the state of funding, but said that given that lack of information local authorities should plan for the worst.
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