Britannia Radio

An economy flat on its back

They’ve all got the message now.  Both the two Labour supporting serious papers here -The Guardian and The Independent -  have finally got the message that the situation is dreadful.  Readers here will not be surprised because I’ve been hammering that message home for months!   The Sun also gives the same message in its usual forceful way. 

Christina 

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THE SUN SAYS        24.10.09

Slump thump

AFTER frothy talk of higher house prices, Britain came down with a bump yesterday.

The economy did far WORSE than expected in the last three months

It makes a mockery of Labour's claim that Britain was well-placed to weather the slump.

France and Germany are already out of recession. 

Hong Kong and Japan are clear of the downturn, while thriving China and India have seized opportunities from the crisis. 

Here, we are mired in the worst recession since records began. Chancellor Darling's rosy forecast of a return to growth has been blown out of the water.

All we can do is keep printing money - itself a recipe for trouble.

If the Tories win the election, they will inherit an economy flat on its back.

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GUARDIAN 24.10.09

Recession figures hit Brown's election hopes

• Rift between No 10 and Treasury

• Tories attack Brown over economy

• Nicholas Watt and Ashley Seager

The chancellor, Alistair Darling, said he hoped the pre-budget report would still vindicate his forecast that the economy would be growing by the end of this year. Photograph: Gary Calton

Gordon Brown's hopes of fighting the general election on the back of a clear economic recovery suffered a severe blow today when government figures showed that Britain is experiencing its worst recession since the mid-1950s.

To the disappointment of ministers, figures from the Office for National Statistics showed a shock 0.4% fall in gross domestic product in the third quarter of the year.

The figures, which stoked tensions between No 10 and the Treasury ahead of the pre-budget report later this year, were seized on by the Tories as evidence that Brown was wrong to claim that Britain was best placed to weather the recession.

David Cameron said: "France and Germany have come out of recession a full six months before us. It does finally show that all those promises that the prime minister made that we were well prepared, that [he] ended boom and bust – this was just nonsense. We have got to get plans to get the deficit under control and we've got to have plans to get Britain working. Those plans need a new government."

The Tories intensified their attack on the government after the figures confounded widespread hopes that the economy had returned to growth after five consecutive quarters of recession.

City economists had almost unanimously expected a small increase in GDP. Quarterly records go back to 1955 and show there have never, until now, been six quarters of contraction in a row.

The drop in GDP sets the scene for a tense month of negotiations between the Treasury and No 10 ahead of the pre-budget report (PBR), due before Christmas, which will be one of the most significant events before the general election.

Alistair Darling said that he hoped the PBR will still vindicate his judgment back in April's budgetthat the economy will be growing by the end of this year. But there has been irritation in the Treasury with Brown, who has been talking up the economy in recent weeks in the hope that a strong return to growth will set the stage for an election fightback.

Brown told the BBC's Andrew Marr show on 27 September: "I think you'll see figures pretty soon that shows the action that Britain is taking yielding effect … There's a suspended judgment as people see us coming out of the recessions."

Days earlier, during a trip to New York, Brown indicated that growth was already under way, claiming: "We have been looking actually at how in the pre-budget report there may be extra growth that is taking place in the economy that we have got to register."

Darling made clear his irritation with Brown today when he said that he has been warning people to be cautious. "We are not out of the woods yet," the chancellor told Radio 4's The World at One. "I have always said, when people were talking about this quarter, we had to be cautious. There is a lot of uncertainty in this country, there is a lot of uncertainty in other countries as well."

Darling said he stood by his budget forecast that growth would be under way by the end of this year. "I think the economy will begin to grow at the turn of the year."

Darling's intervention showed his renewed confidence after he resisted attempts by Brown in the summer to move him out of the Treasury. 

Labour's poor performance in the local and European elections in June made it impossible for Brown to move him and the chancellor's friends believe he now has a relatively free hand in the pre-budget report and in next year's budget before the general election.

Vince Cable, the Liberal Democrat treasury spokesman, described the drop in GDP as a "cold blast of realism".

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INDEPENDENT 24.10.09

Osborne receives backing from the City

Shadow Chancellor's approval rating soars in Independent survey

By Andrew Grice, Political editor

George Osborne’s reputation among businessmen has bounced back after his speech to the Tory conference outlining tough measures to rein in public spending.

Labour has branded the shadow Chancellor the Tories’ “Achilles heel” and a “boy in a man’s job” and tried to exploit doubts in the City of London about his credentials.

But a ComRes survey of 184 leading businessmen for The Independent found a dramatic improvement in Mr Osborne’s ratings since his conference speech, in which he announced plans to freeze public sector pay, raise the state retirement age and curb tax credits for people on middle incomes.

The number of businessmen who say they are confident in Mr Osborne’s ability jumped from 36 per cent last month to 55 per cent this month. The proportion who think he is “out of his depth” dropped from 46 to 36 per cent, while the number who believe he “lacks experience” fell from 75 to 68 per cent.

Seven out of 10 business leaders believe the shadow Chancellor understands business, up slightly from 65 per cent last month; 64 per cent think he has the right ideas about how to manage the British economy, up from 49 per cent.

Seventy-three per cent feel he would make a better chancellor than Alistair Darling, compared to 60 per cent last month. In contrast, Mr Darling’s “confidence rating” has dropped from 25 to 21 per cent in the past month, while Gordon Brown’s rating remained at 20 per cent.

Mr Cameron’s “confidence rating” rose from 60 to 67 per cent, while Vince Cable, the Liberal Democrats’ Treasury spokesman, who was criticised after launching plans for a “mansion tax”, saw his rating slip a little from 60 to 58 per cent.

Nick Clegg enjoys the confidence of 24 per cent of businessmen (up from 20 per cent last month). Lord Mandelson, the Business Secretary (41 per cent) is outgunned by his Tory counterpart Kenneth Clarke, the most highly-rated politician among business leaders on 73 per cent.

According to ComRes, business leaders see little sign of “green shoots” in the economy. The proportion who detect signs of recovery in their sector dropped slightly from 49 to 48 per cent over the past month. The number who see no signs of recovery rose from 41 to 43 per cent.

This finding chimes with yesterday’s official figures showing that Britain remains in recession, dashing the Government’s hopes of a return to growth.

Ministers insisted Britain was still on course to achieve the Chancellor’s Budget prediction of growth by the turn of the year, and that the Treasury always expected negative growth in the third quarter. But the figures undermined Labour’s claims that Britain is “better placed” to withstand the slowdown in the global economy. Mr Brown said last month that “we are now coming out of recession” and Mr Darling said on Wednesday: “The worst of the recession is behind us.”

Mr Osborne said the “deeply disappointing” figures showed the Government’s anti-recession measures were not working. He added: “There are many millions of people who will be deeply concerned to see that Britain is still in recession six months after France and Germany came out of recession. It destroys the myth that Britain was better prepared.”

Mr Cable said that despite the Government's stimulus package, the economy still faced massive structural problems: “This news adds to serious concerns over the realism of Government plans to deal with the burgeoning public debt. It is critical ministers spell out a credible path as to how they will deal with the deficit.”  [That is a crucial point.  Darling and Brown refuse to face that issue at all, merely saying - “Not yet” and “Later” .  It cannot be left ]