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Recovery Watch: Darling's recovery claims dead on arrival
by David Campbell on Apr 29, 2009 at 12:00
Jolted by the scale of the unexpected £220 billion debt issuance and backed by a highly optimistic growth estimate, traders marked down sterling internationally in the wake of last week’s budget.
The pound came back after the initial sharp intake of breath, but the perceived damage had already been done.
The UK contracted 1.9% in the first quarter of the year, far worse than the 1.5% consensus prediction and in the opposite direction to the expected improvement.
An annual fall of about 4% now looks possible, while to manage Darling’s estimated -3.5% the economy would have to be broadly neutral for the next three quarters.
Vicky Redwood, UK economist at Capital Economics, said: ‘The provisional UK GDP figures for Q1 suggest the recession has been deeper than previously thought. The 5.5% drop in industrial production was broadly as we expected given monthly figures, with the main surprise being the 1.2% slump in services output.’
The IMF revised its full-year UK estimate downwards to 4.1% and also contradicted Darling’s claim that international fiscal stimulus would lead to a rapid V recovery.
The chancellor had said the country would return to growth as soon as the last quarter of this year,
a statement that produced jeers in parliament.
In a gloomy assessment the IMF predicted a longer downturn stretching to a -0.4% growth figure for 2010 as the consumer drivers of the economy stayed at home.
Elsewhere in the week in numbers, CBI survey stats continued to show some improvement, although the sector continued to contract.
The quarterly UK business optimism balance moved from -64 to -60, while monthly output expectations moved from -48 to -32, despite a deterioration in domestic orders.
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4 comments so far. Why not have your say?
george startup
Apr 29, 2009 at 12:34
sir, is this person going to write an article apologizing to Darling when he turns out to be right.
Did the IMF, warn of the coming crises, no, then can they be relied on. no. o well.
The further the pound falls the better for exporters.
All we read shortly ago was the pound would collapse, has it, no. o well.
Every economy is lower, it is irelevent, only getting it back matters. the government are doing as well as any in the world.
Did your writer foresee the crises and write an article about it, no. o well.
report thisDoug
Apr 29, 2009 at 15:16
Sure, we have a global crisis which cannot be specifiically blamed on the Labour Party, or Darling in particular. Gordon Brown, however has failed to act in the prudent manner which he told us he favoured.
With record growth figures for the last decade we now discover the cupboards are bare with no contingency at all in place.
Darling is a mere puppet of the megalomanic at the top who is so far up himself he really ought to do the decent thing...
Once again the Conservative party are going to have to clear up the mess left by a goverment addicted to spending OUR money on things we neither want or need. And don't even talk about MP's expense accounts!!!
The IMF board does not risk losing their jobs if their estimates are a little out. Labours only hope of staying in is if they lie to us all and we believe them.
Move over Gordon
report thisgeorge startup
Apr 29, 2009 at 16:07
Obviously Gordon Brown has been forced to take an un-prudent course.
He is now rightly moving with the situation forced on him.
He would be very clever to carry on as if nothing had happened.
Let's judge him in due course, would be more sensible than shouting the odds before we know the outcome.
Better to have a megalomaniac than a bunch of incompetent posers, who only have one possible voter (Doug) as far as a quick pole shows.
Worth noting it is the IMF and other "economists" who advise governments. Don't blame the government if the advice they get is wrong they have to put it right.
report thisJohn Stirling
Apr 29, 2009 at 18:01
Surely it is right to judge Brown on his track record.
1) This is the chancellor who 'abolished' boom and bust. If he is avoiding responsibility for the bust by it being a 'global phenomenon' then so to was the boom. In which case why do we have a chancellor?
2) We have had historic relative out performance as a country from roughly 95 to 2005 - Brown inherited it, kept it for a few years (whilst keeping other people's spending plans), and then blowing it on excessive spending rather than reducing debt.
3) The Bank of England predicted this in 2007. A number of other commentators did too. Those in charge ignored it. Across the globe.
So yes, Brown is not massively more culpable than the other halfwits across the globe, and possibly did no worse than the other mob would have - we can never know; but he did not do as he claimed - he has never been prudent, he has never trusted his 'cabinet of excellence', and he is not a worthy Prime Minister.
So 'george startup' - he has been judged in 'due course' - we are 12 years in after all - and he has been found wanting. Time he went. To quote Dr Who - 'doesn't he look tired?'
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