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Don't Bank On A British Recovery

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Don't Bank On A British Recovery

It may have added a Nobel prize winner to its list of supporters but the British economy still faces very tough times.

LONDON -- Paul Krugman is one of the few people who are bullish on Britain. The Nobel-prize winning economist said the U.K. economy currently looked like "one of the best in Europe" in an interview with the Observer, and said the Labor government's forecasts of a recovery early next year--widely seen as too idealistic--may well be accurate. Yet most economists and businesses are still gloomy about the outlook for the U.K.

Sustainable growth is a long way a way, argues the Confederation of British Industry, the voice of British business. Though the organization is predicting a mild recovery next year--0.3% and 0.5% growth in the first two quarters of 2010--"we still have some way to go before the UK economy is truly out of the woods," the organization's chief economic advisor, Ian McCafferty, said Monday. "Consumers… will still face tough times as high saving and lower income eat in to their ability to spend."

The CBI has hinted that the 125 billion pounds ($204.4 billion) of quantitative easing pledged by the Bank of England--through the purchase of corporate and public sector debt--may not be enough, and that the central bank may even have to go beyond the 150 billion pounds ($245.4 billion) that it has been authorized to purchase. The organization has also taken issue with the government's approach to the car industry, arguing that it has not done enough to support the sector's access to finance.

An even more gloomy view is taken by Hans Redeker, the London-based head of FX Strategy at BNP Paribas, who believes that Britain's quantitative-easing program is just a means of "saving the pain for later." The country must yet face its elephant in the room: the highly-leveraged consumer. As the public and private sector de-leverage after the recession, private household debt will have to come off its highs, dampening domestic consumer demand hugely.

The British government and central bank are hoping that by the time that happens, there will be a revival of international demand. But lower domestic demand means lower investment in the financial sector as well as the real economy. "The U.K. is definitely not the best place to be positioned at the moment," remarked Redeker, who remains bearish on the pound, and expects another fall in the currency's value this August.

In the past couple of weeks, a dribble of data has given the beleaguered government of Gordon Brown some respite, suggesting that the U.K. may finally be seeing signs of recovery. Last week Britain's National Institute of Economic and Social Research said GDP growth of 0.1% in May and 0.2.% in April pointed to an emerging "picture of stabilization." House prices rose 1.1% in April, according to government figures released last Wednesday, while the rate of decline in the manufacturing sector has slowed to a 12-month low, according to the PMI Index released at the start of June. (See "Is The U.K. Recession Over?")

This has been seen--by some at least--as a vindication of Brown's policy which has been to go into spending overdrive to offer fiscal stimulus to the economy, but drag the government budget deficit to a whopping 90 billion pounds ($147.2 billion) for the year. (See "British Chancellor's Grand Delusion.")

Monday's data contributed to a sharp rally in sterling, which hit its highest level this year against the euro on Friday. The pound rose 0.6%, to 1.181 euros on Monday, from 1.174 euros on Friday, though it slipped 0.6% to $1.635, from $1.644 on Friday, after comments by Russia's finance minister gave the greenback a boost. (See "The Pound Is Back.")

Gordon 'save the pain for later' Brown. He will go down as the most hated Prime Minister, British politician, and man for this generation; and our generation will go down just as poorly for our grand kids, as they live through our 'deferred' age of austerity.

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Don't Bank On A British Recovery

Gordon 'save the pain for later' Brown. He will go down as the most hated Prime Minister, British politician, and man for this generation; and our generation will go down just as poorly for our grand kids, as they live through our 'deferred' age of austerity.

He has a long way to go to be more hated than Thatcher.

Anyhow, all is well in the economy ;-)

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Do you really think life would be a lot different under any other main party. :lol:

Same song different song sheet. ;)

If the Tories had been in power we would still have been caught with our pants around our ankles.

However would we have been in this mess with Vince Cable as Chancellor or would have taken the easy option and gone along with the ride?

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He has a long way to go to be more hated than Thatcher.

Thatcher had her faults, but she was decisive, strong, had a firm vision of the future and was re-elected three times.

Gordon Brown, on the other hand...

A worse Prime Minister in the last 300 years? Any suggestions?

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If the Tories had been in power we would still have been caught with our pants around our ankles.

However would we have been in this mess with Vince Cable as Chancellor or would have taken the easy option and gone along with the ride?

I would love to think things would have been different, but find it hard to believe it would...the banking crisis would still have been with us, but the public purse would have been healthier.

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Thatcher had her faults, but she was decisive, strong, had a firm vision of the future and was re-elected three times.

Gordon Brown, on the other hand...

A worse Prime Minister in the last 300 years? Any suggestions?

Spencer Perceval?

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Spencer Perceval?

Hmm, just looked him up in Wikipedia.

True, he was opposed to electoral reform, so not very progressive; also six people turned down the role of chancellor in his government (not sure why). But he seems to have run the Napoleonic wars well enough.

His main claim to being a bad PM seems to be that that he was assassinated by a madman. Seems a bit unfair to blame him for that.

Next contender? Chamberlain is the obvious one, but at least he tried to avoid a bloody war, however mistakenly.

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Hmm, just looked him up in Wikipedia.

True, he was opposed to electoral reform, so not very progressive; also six people turned down the role of chancellor in his government (not sure why). But he seems to have run the Napoleonic wars well enough.

His main claim to being a bad PM seems to be that that he was assassinated by a madman. Seems a bit unfair to blame him for that.

Next contender? Chamberlain is the obvious one, but at least he tried to avoid a bloody war, however mistakenly.

Anthony Eden?

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Anthony Eden?

A gent, with a distinguished career under Churchill in the war. Had to wait too long to succeed Churchill. Just one big mistake; thought Britain could still throw its weight around and got shafted by the US.

Worse than Brown? I think not. At least he resigned.

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A gent, with a distinguished career under Churchill in the war. Had to wait too long to succeed Churchill. Just one big mistake; thought Britain could still throw its weight around and got shafted by the US.

Worse than Brown? I think not. At least he resigned.

This is true.

Brown is the worst indeed.

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Thatcher had her faults, but she was decisive, strong, had a firm vision of the future and was re-elected three times.

Gordon Brown, on the other hand.......

Gordon Brown on the other hand is not a socialist and did not redistribute huge amounts of wealth to the poor by selling them social housing at heavily discounted prices thus robbing the taxpayer of a valuable asset in order to enrich the bottom two deciles of society. Long live comrade Thatcher!!!!

What do I win?

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"An even more gloomy view is taken by Hans Redeker, the London-based head of FX Strategy at BNP Paribas, who believes that Britain's quantitative-easing program is just a means of "saving the pain for later." The country must yet face its elephant in the room: the highly-leveraged consumer."

AN ELEPHANT IN THE ROOM?!? :lol:

WOULD THAT BE THE HIGHLY-LIAR LOANED PROPERTY "BUYER"??! :P:rolleyes:

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An even more gloomy view is taken by Hans Redeker, the London-based head of FX Strategy at BNP Paribas, who believes that Britain's quantitative-easing program is just a means of "saving the pain for later." The country must yet face its elephant in the room: the highly-leveraged consumer. As the public and private sector de-leverage after the recession, private household debt will have to come off its highs, dampening domestic consumer demand hugely.

I wonder whether that is anything to do with the election?

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Hmm, just looked him up in Wikipedia.

True, he was opposed to electoral reform, so not very progressive; also six people turned down the role of chancellor in his government (not sure why). But he seems to have run the Napoleonic wars well enough.

His main claim to being a bad PM seems to be that that he was assassinated by a madman. Seems a bit unfair to blame him for that.

Next contender? Chamberlain is the obvious one, but at least he tried to avoid a bloody war, however mistakenly.

Chamberlain had a degree in Engineering (contrast with Brown who studied the History of the Labour Party at university), was a successful businessman, a reforming Mayor of Birmingham and achieved several good things as Health Minister and Chancellor.

He is fated though to be forever remembered for Munich. He did though at least recognise that he wasn't up to the job as a war time PM and stood down and served in Churchill's government until his death a few months later.

Can you imagine Brown putting the country's interests ahead of his own in a similar way?

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He has a long way to go to be more hated than Thatcher.

That would be correct. ...If you'd said it 5 years ago. But since then? Well...

Nomadd

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He has a long way to go to be more hated than Thatcher.

At least Thatcher represented an ideology that polarised people -- she had numerous supporters as well as detractors (still does).

Gordon Brown represents ... Gordon Brown, I guess. He started out with a belief in the right to something for nothing, and went on to craft an economy based on that premise. Come to whatever passes for an internet forum in 20 years time and see if you find anyone taking his corner. My prediction is that history's judgement will leave George IV looking like popular hero by comparison ;)

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Chamberlain had a degree in Engineering (contrast with Brown who studied the History of the Labour Party at university), was a successful businessman, a reforming Mayor of Birmingham and achieved several good things as Health Minister and Chancellor.

He is fated though to be forever remembered for Munich. He did though at least recognise that he wasn't up to the job as a war time PM and stood down and served in Churchill's government until his death a few months later.

Can you imagine Brown putting the country's interests ahead of his own in a similar way?

At the time of Munich, Churchill said of Chamberlain:

'You had a choice between war and dishonour. You chose dishonour, you will have war.'

Pity there's no-one around to demolish Brown in similar fashion.

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He has a long way to go to be more hated than Thatcher.

Anyhow, all is well in the economy ;-)

What? Even now, infact especially now, people are coming to understand what thatcher did.

Liebour will not recover from this for generations. Bliar and Brown will be the most hated since hitler.

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What? Even now, infact especially now, people are coming to understand what thatcher did.

Liebour will not recover from this for generations. Bliar and Brown will be the most hated since hitler.

Thatcher's historical reputation hinges on whether she will come to be seen as responsible for this mess. It's true she ran down manufacturing and was all for deregulation of the markets; does that mean she's to blame for the inevitable outpouring of greed and short-termism that resulted?

The jury is out.

As for Brown, I believe he will become a by-word for everything a PM shouldn't be.

If you made him up as a fictional character, people would say, 'He's quite funny in a grotesque sort of way, but Francis Urqhhart was far more believable.'

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