When all the signals are at danger what are we to do about a government that is determined to take brakes off and let it rip? They talk of getting through the recession by spending , but it’s borrowed money they are spending. That way lies ruin. But do they care?
Some have come to the conclusion that Brown and Mandelson are deliberately bankrupting the UK. They believe that their priority is to to obliterate the UK as an independent country in a federal EU .
These people think that next thing Brownand 0Mandelson want is to get us into the Euro. But they know Britons will never vote to abandon the pound and they’ve promised a Referendum on it. [But they promised a referendum on the EU Constitution! -cs]
So, first bankrupt Britain, and then we’d have to join the euro, they think. The IMF would be called to bail us out and one of the conditions would be ditching Sterling and joining the Euro. [This is where I part company with this line of thought. I cannot see the IMF being party to such pressure. It could destroy the IMF. It might recommend the Euro but no more ] They go on to say that the referendum would be held with a pistol at our heads!
Brown/Mandelson aren't just pursuing a scorched earth policy - they are pursuing a destroy Sterling policy .
I would agree with the last paragraph but my belief is that Brown thinks he can make it impossible for the Tories to rescue the country and that Labour would soon be called back.
“Our task now is surely no less than to fix the character of our time. Our finances are broken. Our moral fabric is breaking. Our political system is beleaguered. And our society is broken. Many of us feel ill at ease; we know that all is not well. Secretly, we almost scream out loud for change.” Ken Costa, chairman Lazard International.
Christina
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TELEGRAPH 1.7.09
1. The one inescapable truth voters must be aware of come polling day
We knew there was a sharp decline in economic activity in the first three months of the year but, as has so often been the case in recent years, the initial set of official figures were wrong.
By Damian Reece
We knew there was a sharp decline in economic activity in the first three months of the year but, as has so often been the case in recent years, the initial set of official figures were wrong.
The revised figure is a rather steeper 2.4pc quarterly fall, or 4.9pc year-on-year. Anyway, the scale of decline reveals the severity of our economic problems. If the decline went on like the first quarter, we’d lose nearly 10pc of our GDP this year. Tueday’s figures reveal in garish statistical technicolor that post last October’s banking crisis, the real economy suffered a sharp cardiac arrest although the recessionary furring started at the beginning of April last year, a fact spotted by some of us at the time but ignored by the Monetary Policy Committee (MPC). Earlier treatment of the patient with quicker, more decisive cuts in interest rates, as we argued for, would not have avoided recession, but it could have eased the pain.
All eyes will be on the GDP figures for the second quarter, out July 24. These should still show some improvement from the first quarter and, quite possibly, some growth. This was in part a reversal of the natural destocking activity that companies indulge in during hard times – they just stop buying so much stuff and make do with what’s on the shelves. Eventually they run out and have to start spending again.
But while some leading indicators have been moving forward since November, things are extremely fragile. This is a recession unlike any that the current workforce, young or old, has ever seen. But we went into this unprecedented period of both financial and economic crisis with an enormous deficit requiring borrowing that will hit at least 12pc of GDP this year (that’s the Chancellor’s estimate, so count on it being worse in reality) and total national debt will hit 80pc of GDP by 2013-14. We’ve borrowed enough to fight a world war.
The public finances are in hock more profoundly than ever before, which is why Labour can’t spend its way to recovery, as it claims, and why cuts are inevitable whoever is in power. Reducing these deficits will be the one overarching, all- encompassing policy priority for years to come. All decisions relating to the public purse will have to be made with reference to that one, simple inescapable truth.
That’s what voters must understand and the issue they must have foremost in their minds when assessing manifestos and going to the polling stations..
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2. Economy shrinks at 1930s rates
The recession is now on a par with the very worst year of the Great Depression,
By Edmund Conway and Angela Monaghan
The dire state the UK is in emerged on Tuesday as revised figures uncovered the full extent of the country's economic contraction.
The economy shrank by 4.9pc in the year to the first quarter of 2009, the Office for National Statistics said. The fall in gross domestic product was significantly greater than had previously been calculated, as Government statisticians became aware of the full scale of the fall in company activity.
"Clearly this is now the worst peacetime recession since the 1930s," said Michael Saunders, chief UK economist at Citigroup. "The worst contraction then was a year of around -5pc; this year will not be hugely different."
The contraction in GDP during the first quarter alone was 2.4pc, compared with previous estimates of 1.9pc, according to the ONS. This was the biggest one-quarter fall in 35 years.
Moreover, the 4.9pc annual fall was the biggest since Government records began. According to statistics compiled by economic historian Angus Maddison, the contraction was the worst since 1931 – worse than any year during the Second World War and the demobilisation that followed.
The revision was partly the result of a steeper fall in construction and services output than first thought. Economists had predicted a downward revision but not on that scale. The ONS also revealed that the recession started in the second quarter of 2008, a quarter earlier than previously thought.
Simon Hayes of Barclays Capital said that although the figures were historical, they had a direct bearing on future growth. He said: "It reinforces the message that the recent signs of 'green shoots' reflect a rebound from an extraordinarily sharp fall in activity earlier in the year. We continue to be cautious about seeing them as material news about the medium-term growth outlook, which is likely to be hamstrung by tight credit conditions and the need for fiscal consolidation."
Liam Byrne, chief secretary to the Treasury, said it would not be revising its growth forecasts. "There have been some tentative signs that the fall in output is moderating and I remain confident but cautious about the prospects for the economy," he said.
George Osborne, the shadow Chancellor, said: "We hope the recovery comes as soon as possible but sadly we now know this recession has been longer and deeper than we had thought. This also means that in the future unemployment will be higher and Labour's debt crisis will be even worse."
There was better news yesterday from Nationwide, which said that UK house prices rose for the third month out of the last four in June, by 0.9pc to an average of £156,442. House prices were 9.3pc lower than a year ago, marking the slowest rate of annual decline since July last year.
In a further blow for the UK, newly released figures from the International Monetary Fund showed that international investors' enthusiasm for Britain has dimmed further, with a third consecutive decline in the proportion of sterling held by central banks and other institutions
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