Britannia Radio

Slowly the "event" gets analysed.  The normally pro-Labour BBC at 6 
o'clock  (Anchorman + Stephanie Flanders + Nick Robinson) all tore 
into the dreadful report that Darling had given the nation, 
disbelieving the forecasts  and now Liam Haligan's verdict - "What a 
fiasco".   I recommend this except for one importanrtt point which is 
his conclusion and which shows that even he does not appreciate the 
rules of the political game!

IF YOU DON'T READ ANYTHING ELSE READ THIS - AND WEEP.

XXXXXXXXXXXXX  CS
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TELEGRAPH   22.4.09 (online) - ? 23.4.09 print ?)
The lesson from Budget 2009 is that our politicians are blind to 
Britain's financial risks
What a fiasco! I've hurled some pretty lurid abuse at this 
government's economic stewardship in recent years - and long issued 
dire warnings about the dangers of Gordon Brown's reckless spending.

By Liam Halligan

But having just watched Alistair Darling's Budget, I'm going to have 
to come up with a whole new vocabulary.

It's difficult to put into words the extent of the meltdown in the 
UK's public finances. During his 2008 budget, Darling said the UK 
would borrow a total of £70bn during the two financial years 2009/10 
and 2010/11. Today we learnt £348bn of new debts will be racked-up on 
our behalf over that period - a jaw-dropping five-fold increase on 
the financing needs the Chancellor announced just twelve months ago.

Between now and 2013/14, in fact, the UK government will now be 
looking for no less than £703bn of debt-finance, rather than the 
£434bn estimate Darling made at the time of his Pre-budget report in 
November.

  That's an astonishing £30,000 of extra borrowing for every UK 
household - all of which will be have to paid back from future taxation.

This is government profligacy on a quite simply unprecedented scale - 
a disgraceful, morally repugnant raid on our children and 
grandchildren. Yet it's highly likely that even these blood-curdling 
borrowing forecasts will turn out to be under-estimates.

One reason is that Darling's has made some extremely rosy assumptions 
about future UK growth. While he admitted our economy will contract 
by 3.5pc this year, the Chancellor foresees a return to growth of 
1.25pc in 2010, with the economy booming once more soon after, 
expanding by 3.25pc in 2011.

These estimates are pie-in-the-sky. Most economists think the UK will 
contract next year too. And I know not a single forecaster outside 
the Treasury betting on growth above 3pc the year after.

Darling is relying on the UK rapidly returning to the same underlying 
trend growth rate we've seen over the last decade - when, as we now 
know, the economy was driven by an unsustainable combination of high-
debts, ever-rising house prices and endless mortgage equity withdrawal.

So when growth turns out to be lower than Darling foresees, the UK's 
borrowing needs will spiral even higher. However many (more) school 
playing fields this government sells-off, it won't raise the £16bn 
penciled in from "asset sales". The fabled "Whitehall efficiency 
savings" won't materialize - they never do.

For all these reasons, today's truly ghastly borrowing totals should 
be seen as an absolute minimum estimate of the extra debts the 
government will take on. The strong probability is these numbers will 
go much higher - because that's been the pattern in each and every 
New Labour budget since 2001.

As I wrote in last weekend's Sunday Telegraph, the truth is that 
Darling is now an irrelevance. Don't misunderstand me - the 
disastrous public finances he just unveiled matter hugely and will 
cast a pall over the UK political and economic landscape for several 
decades hence. But, barring a political earthquake, Darling and Co. 
won't be around to sort out the mess.
Following a general election in 12-18 months' time, it's the Tories 
who'll be attempting to issue a colossal £700bn of UK sovereign debt 
(and counting) between now and 2014.

"Attempting" because, as I've been warning for months, the next half-
decade or so will make or break the UK's credibility on international 
debt markets. Over that period - just as many other recession-hit 
Western nations are flogging large bundles of sovereign paper - this 
country is set to borrow a higher multiple of its reserves, and a 
higher share of its GDP, than any other nation on earth.

Between now and 2012, our demography also turns nasty - as the baby-
boomers start retiring in earnest. That would have strained our 
public finances even without New Labour's spending orgy of recent 
months and years.

A sovereign downgrade now looms. After today's disastrous borrowing 
numbers, anyone who doesn't understand that either doesn't have the 
first clue about global debt markets or is being willfully blind to 
the scale of the problem we face.

That's why - there is no other way to say this - I found David 
Cameron's response to the Chancellor even more worrying that the 
statement made by Darling himself.  [I feel I must interpolate here 
the traditional role of the Leader of the Opposition on Budget Day.  
It is his job to deal briefly with the overall financial competence 
of the government while leaving the opposition's view of the Budget 
itself to the shadow chancellor who will have had time to study the 
actual figures with his team.  To criticise from ignorance would be 
plain silly.   That means we must wait until tomorrow and see if 
Osborne is equal to the task.  I wait with bated breath - but, I 
admit, with little confidence -cs]

Cameron, as he keeps saying, "is the future". The really alarming 
thing about today is that we heard nothing to suggest the Tory leader 
has even grasped the perilous financial dangers the UK now faces, let 
alone worked out a plan to steer us away from the precipice.

Last year, institutional investors began dumping UK government debt. 
In recent weeks, several gilt auctions have been under-subscribed. 
Following today's budget, gilt prices slumped further as yields 
spiked - with creditors demanding ever-higher risk premiums to lend 
our feckless politicians cash.
Buried in the budget fine print was the revelation that the 
government will actually try to flog £240bn of gilts over the coming 
year and another £22bn of short-term debt on top of that. That's some 
75pc above an official estimate released only a few weeks ago.

Faced with such scandalous mis-management, the Tories need to grasp 
the situation by the neck and do everything possible to reassure 
international debt markets the UK will soon by run by somebody who 
can actually add up.

Yet Cameron utterly failed today to do anything of the sort. There 
was no credible plans showing how the Tories will rein in the UK's 
sprawling state - or even a convincing statement they understand the 
need to do so.

There was absolutely no Tory attempt to start the necessary process 
of building political support for the austerity measures this country 
will soon have to if it is to avoid the ignominy not only of a 
sovereign down-grade, but an IMF bail-out.

Faced with the chance of a life-time, an opportunity to truly make 
the political weather, Cameron took the easy route and relied on 
slogans and cheap pot-shots - making a speech that lacked even the 
pretence of economic coherence.

His ever-growing cadre of spin-doctors are no doubt telling him all 
he needs to do is say nothing, avoid frightening the horses, and 
he'll soon become Prime Minister. Yes - but Prime Minister of what?
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POLITICS HOME 22.4.09


Lamont: Spending cuts can't be avoided.
17:40 | 22/04/2009

Lord Lamont, former Tory Chancellor
BBC News

Lord Lamont said he was "shocked and numbed" by the Budget borrowing 
figures and predicted cuts in public spending would have to be made.

"I was shocked and numbed when the borrowing figures came out, and 
they went on for years.

"My real fear is that these figures will prove over optimistic. 
Growth could be sluggish for a few years and borrowing higher. Tough 
decisions of the like we have not seen for decades will have to be 
made," he said.

Asked if that meant cuts in public spending, he said: "I do not think 
they can be avoided. This did not sound or feel like an austerity 
budget. He would have been better off being tougher on spending.

"David Cameron and colleagues have shifter their position and 
recognise the gravity of the situation," he said.