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Damian Reece's Outlook:independant Today

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The worm is turning

link: http://news.independent.co.uk/business/com...ticle314835.ece

or read below

Damian Reece's Outlook: Brown has punctured his political reputation, but he has damaged the economy even more

The naked truth of Britain's real economic malaise has been laid bare, and with it the appearance of Gordon Brown's political invincibility

Published: 24 September 2005

There is the strong whiff of humble pie coming from the Chancellor's flat in Downing Street this morning. A very large slice indeed is being prepared for Gordon Brown ready for his arrival from Washington, where he has been attending a meeting of the International Monetary Fund.

Mr Brown and his Treasury spin doctors have started to pave the way for a deeply embarrassing admission that his expected 3 to 3.5 per cent growth rate for the UK economy is wrong. It is going to have to be reduced, and reduced a lot, judging by the noises coming out of Washington.

Mr Brown's admission is the political equivalent of a very large corporate profits warning. The warning is all the more shocking because it comes from a Treasury management team, led by Mr Brown, that for the past eight years has slapped down anyone brave enough to question its governance of the economy with a battery of facts and figures about unprecedented economic stability and well-being. Indeed, when it comes to forecasting, no one gets it right like Mr Brown, according to the Treasury.

The growth rate is the assumption on which all Mr Brown's most important economic policies are based. Cutting it, to about 2-2.5 per cent, will immediately raise the very real prospect of either big cuts in public spending, to the tune of £10bn a year, or an increase in tax equivalent to 3p on the basic rate of income tax. Thank goodness the election was in May, Tony Blair will no doubt be thinking as he peruses this morning's headlines.

If Mr Brown himself admits the economy isn't going to grow at anything like the rate he has been insisting on for more than two years, then all those terrible predictions and calculations of fiscal black holes are about to come true. Mr Brown's political enemies, in all three major parties, will be clapping their hands with glee. For them, the emperor has been exposed at last. The naked truth of Britain's real economic malaise has been laid bare, and with it the appearance of Mr Brown's political invincibility.

Revenge will be sweetest, however, for Rodrigo Rato, the managing director of the IMF who has long suffered Mr Brown's haughty put-downs. Six months ago, the pair shared a platform shortly after the IMF had cut its UK growth forecast to 2.6 per cent. Mr Brown said Mr Rato's staff had got their figures wrong in the past and were wrong again. This week the IMF cut again to 1.9 per cent, but this time Mr Brown has been forced to follow suit. Humiliation rarely comes as complete as that. Mr Brown will blame the oil price for the UK's economic woes. But this is poppycock. Sure, the oil price doesn't help but it will simply further damage an economic system already exposed by too much personal and public sector debt.

The damage to Mr Brown's political credibility over his climbdown on growth rates is significant, but sadly for the rest of us the damage to the economy will be much greater. Labour's poor record on rising levels of taxation, for higher income groups in particular, is about to get worse.

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All this Brown bashing by the media is a little ironic. Don’t they live in the UK were they not aware of the profligate spending by consumers and government, the massive housing bubble etc. They all seem to have had a collective revelation that the UK economy is built on foundations of hot air unsustainable debt, froth and spin.

They are only discovering now that the whole thing is a crock of sh1t ? bizarre.

<_<

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All this Brown bashing by the media is a little ironic.  Don’t they live in the UK were they not aware of the profligate spending by consumers and government, the massive housing bubble etc.  They all seem to have had a collective revelation that the UK economy is built on foundations of hot air unsustainable debt, froth and spin.

They are only discovering now that the whole thing is a crock of sh1t ? bizarre.

<_<

No, journos (most) work along the lines of fashion. If it is in, yeah, then go for it.

Quite childish really, a bit like the pack mentality. However, this will finally drive the point home as they will all join in now and feal safe in what they are writing about. To be fair, how can you expect a journo to be an expert on housing one week and the American state rescue service the next.

As Andrew Marr said: we need 'SENSATION' . (Andrew Marr.My Trade) MACMILLAN.

Edited by RRP

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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