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Darling Rejects Oecd's Uk Recession Claims

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http://www.guardian.co.uk/politics/2009/se...cts-oecd-claims

Alistair Darling today rejected claims from the Organisation for Economic Co-operation and Development that the British economy would not pull out of recession until 2010.

The chancellor said the OECD had been wrong before and he still believed the recovery would start by the end of the year.

The OECD's prediction was embarrassing for Darling, who is today hosting a meeting of G20 finance ministers in London.

The chancellor and Gordon Brown have been keen to paint the UK as the leader of the fightback against global recession, but the OECD believes that, while the world economy is starting to emerge from the deepest slump since the second world war, Britain is lagging behind.

The British economy is still contracting, and will record zero growth in the final quarter of this year, according to the OECD, while the eurozone and the US will score two quarters of growth.

In an interview on BBC Radio 4's Today programme, Darling said he did not accept the OECD forecast.

"The OECD has made predictions in the past ... some have turned out not to be spot on," he said.

"My prediction in the budget was that this country would come out of recession around the turn of the year. I hold to that view."

The Conservatives seized on the OECD forecasts.

Philip Hammond, the shadow chief secretary to the Treasury, said: "Far from being well placed to weather the storm, as Gordon Brown claimed, these figures show yet again that Britain is worse placed than our neighbours by a recession that we were ill-prepared to face, thanks to his economic and fiscal mismanagement.

"We will be the only major economy without any growth this year, and the only one for which prospects have got worse, not better."

The OECD said upbeat news from large emerging markets such as China – where demand is expanding rapidly, together with healthier credit markets – meant recovery in the global economy as a whole could come earlier than it had previously thought.

But as finance ministers from the G20 countries gather to discuss how to cement the recovery over the coming months, the OECD warned that policymakers must avoid stifling growth by withdrawing anti-recession measures too soon.

"Numerous headwinds imply that the pace of the recovery is likely to be modest for some time to come," the OECD said.

"Taking the first steps towards normalisation of policy interest rates from their current exceptionally low levels should, in most cases and on current prospects, wait until well into 2010, and in some cases even beyond."

The OECD expects the UK economy to contract by a total of 4.7% in 2009 – much worse than the 3%-3.5% predicted by the chancellor in his budget – although Germany, Japan and Italy will all fare worse, partly because they contracted so rapidly in the early months of the year.

The organisation also urged the world's developed countries to draw up clear proposals for putting their finances back in order once the unprecedented stimulus packages of the past 12 months are no longer necessary.

"Preparing credible exit strategies and fiscal consolidation plans now, even if actual implementation will only commence later, is desirable," it said.

However, Jean-Claude Trichet, the president of the European Central Bank (ECB), rubbished calls for fiscal stimulus plans to be reined in, saying: "[The] time is not come yet for an exit strategy."

The ECB left interest rates on hold at their record low of 1% amid hopes that the worst of the downturn for the eurozone economies was over.

Trichet said the recovery was "expected to be uneven" both "inside and outside the euro area", and signalled that the ECB had no plans to withdraw its emergency policy of lending unlimited funds to the banks at 1% to keep credit flowing freely.

The OECD's forecasts show a wide variation in performance among eurozone members, with France contracting by just 2.1% this year, while Germany will shrink by 4.8% and Italy by 5.2%.

So how many times since Labour have come to power have Treasury predictions been accurate?

That would clearly back up Darlings claims that on this one he'll be correct.

I'm sure Darling is a very honest man just like the one in No10 but I wish he would support his claims with some evidence.

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Guest BoomBoomCrash

It is apt that a crisis created by fiat should be resolved by fiat; both figurative and literal.

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Guest Parry aka GOD
It's the unforeseeable recovery

Amazing how putting a few words in the right order sums up the whole thing.

Best quote I've seen yet on this board regarding recovery.

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Guest Parry aka GOD
A friend's sister is being made redundant in October, along with 299 others.

The recovery is well and truly on :ph34r:

Yep. I'm getting CV's from old colleagues in the UK. Say there is no work there at all now. 259 about to be made redundant from a major infrastructure consultancy.

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Darling can control the GDP...all he needs to do is tell the Public sector to spend.

the OECD deal in probabilities. Darling has his hand on the controls.

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Guest Parry aka GOD
oh who cares what the frenchies think, we got the olympics get over it :P

latest unemployment rates

France 9.8%

USA 9.7%

Germany 7.9%

UK 7.8%

Wonder how each country measures that?

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Oh right, so he's saying his miracle recovery will start by the end of the year (just in time for the election, vote Labour you stupids!) yet in recent interviews he speaks about the "recovery" as if its already happening.

Perhaps he means that right now the banks have been given billions of our money to make them "recover" and by the end of the year Labour will have had long enough to massage the jobless figures to make it appear things are looking up. Just in time to vote Labour at the election.

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Amazing how putting a few words in the right order sums up the whole thing.

Best quote I've seen yet on this board regarding recovery.

It was homage to interestrateripoff who's keeps getting in first reply one liners nicely summing up the ridiculousness of rampers optimism. ;)

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Guest Parry aka GOD
It was homage to interestrateripoff who's keeps getting in first reply one liners nicely summing up the ridiculousness of rampers optimism. ;)

He does a good job with those, but that one was a corker.

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