Thursday, January 29, 2009

The IMF says the slump is worse in Britain

And the Institute of Fiscal Studies warns that it will take more than twenty years to pay off the debts accumulated during this recession.

Gordon Brown has been claiming

* that the slump is hurting every country in the world, (which is true)
* that Britain is better placed than most other industrialised countries to deal with it, (which is not,) and
* that he deserves full credit for everything that has gone right with the economy, but no blame for anything that has gone wrong (which is ridiculous.)

Unfortunately for the Labour government's argument, the International Monetary Fund has published a report which argues that Britain, far from being better placed to deal with the slump, will be "hit harder than any other advanced nation in the worst recession for more than 60 years." The IMF economists preduct that Britain will be worse affected than the USA, Japan, Spain, Italy, France, Canada or Germany. (See the Times Online report here.)

In the Sun newspaper, George Pascoe Watson writes here about the fact that that the debts Labour is accumulating will take 20 years to pay off, and that the IMF report is a "big blow" to Gordon Brown. As the same paper's leader article adds, Put on the spot by the Tories, the Premier had no answer except to admit we are in “deep recession”.

Meanwhile Ken Clarke has ripped to shreds the arguments for Lord Mandelson's proposals on the car industry.

Labour has failed. They are dashing around in a frenzy of desperate initiatives, confusing announcements with results and panic with resolve.

The choice which the Conservatives offer is not a "do-nothing" policy but a "do-the-right-thing" alternative. And the sooner there is an election so that the public can decide which policy has more chance of working, the better for the country.

2 comments:

Richard said...

I've been wandering round the Huffington Post and their Davos coverage all evening. I also blagged an Economics degree (not a very good one but you can't really teach it - it comes from life) and the fact of the matter is, in my humble opinion - be afraid, seriously.

Obama, whilst cool and err.. elected..what's that mean? presides over a system so greased in pork fat, so intent on offering rhetoric (21st century rhetoric - dedicated website to see the cash go...) that pragmatism and austerity have been crowded out.

Thank God we've only got a few corrupt Lords rather than an institutionally inept Congress.

1 good thing tho is a senator has proposed retrospectively capping 2008 bonusses at $400k - sounds reasonable.

Chris Whiteside said...

I know what you mean.

Because governments (and oppositions)of all colours are aware of the need to avoid a collapse in spending, we are unlikely to see a repeat of the 1930's.

My fear is that in a panic stricken attempt to avoid it, certain governments - particularly our own and that of the US - may go too far in the other direction which could result in a nasty bound of inflation as well as huge debts as the world emerges from the recession.

And no, I am not arguing for doing nothing, I am arguing for getting the size of any stimulous package right.