Wednesday, April 08, 2009

Don't say I didn't warn you

Far be it from me to gloat.

Alistair Darling will use this month's Budget to warn families that years of austerity lie ahead after the economy performed worse than the Treasury had expected.

I wonder what happened to the days when the Budget was secret? We seem to have government by press release these days. Anyway, I digress.

In one of the bleakest Budget statements in decades, the Chancellor will offer few signs of optimism.

Actually, I wonder why anyone needed a press release for that bit of info? It's hardly a well kept secret is it.

On April 22, Mr Darling will not speak of an early recovery but of rising unemployment, a soaring budget deficit and record national debt.

Of course he will - he doesn't have an awful lot of choice!

With drastically reduced Government revenues in the recession, the Chancellor may have to raise fresh taxes and cut back public spending.

Yep - and guess what that will do. Anyone heard of the phrase "vicious cycle"? Just wondering.

While Mr Darling believes that last week's G20 summit should do some good, he is concerned that the recent collapse of the Eastern European economies could lead to a second wave of bank failures, notably in Italy and Austria.

Then a third wave, a fourth wave ..... actually, it's more of a tsunami.

Every source of revenue has been decimated by the downturn, with economic output plunging 1.6 per cent in the final months of last year, and much the same rate in the first quarter of 2009.

Yep - and last week it was predicted that the economy will fall by just 3%. Does he really think that half of that will come in one quarter? Once the taxes go up it will probably fall even more - so he'll put up taxes again to plug the gap ... and so on.

The 25 per cent devaluation of the pound against other currencies would normally have helped a recovery but the global economic slump has meant only limited advantage.

Errr - that and the fact that we import far more than we export. We don't actually make much of anything anymore, so a weak pound isn't the bonus it once was.

Mr Darling believes that the measures already taken - including the VAT cut and the £75billion being printed by the Bank of England through 'quantitative easing' - should provide some impetus.

He does? Wow - even I didn't think he was that stupid.

There is some Treasury optimism that when the upturn eventually comes, late in 2009 or early 2010, it will be robust.

Based on what? Look, I'm optimistic that my one lottery ticket a week is going to make me a millionaire, but that doesn't mean it's going to happen. Where do they think this "upturn" is going to come from? Darling's already told us that we should expect "years of austerity" - does he know what that means?

It means that nobody will be buying much of anything that isn't essential. That means companies won't be selling much of what they produce. That means there won't be many jobs. That means there won't be much tax revenue. That means .... oh, you get the idea by now, surely.

Look, there isn't going to be an upturn this year, next year or the year after. Well, nothing significant anyway. The Chancellor would not be talking about "years of austerity" if he genuinely thought there was a chance of a "robust upturn" in 8 months or so.

There may be slight improvements to the general overall gloom, but nothing sustained and nothing significant. All this will continue to get worse until, eventually, they admit we're in a depression.

By then it will be too late.

2 comments:

Chalcedon said...

On April 22, Mr Darling will not speak of an early recovery but of rising unemployment, a soaring budget deficit and record national debt.

And who caused this pray tel? Who was chancellor for 10 years borrowing money like buggery and squandering away on doomed projects?

With drastically reduced Government revenues in the recession, the Chancellor may have to raise fresh taxes and cut back public spending.

What the bastard should do is fold 90% of all Quangos, cut back on public spending drastically, cut public sector wages by 10%, cut all public sector recruitment except to replace those retiring and cut income taxes to stimulate growth through spending. There should be no increase in taxation. FDuel duty should be reduced to encourage and enable our haulage industry to compete with EU based companies. With a low pound he should give tax breaks to exporters and support to actively sell goods out of the UK and encourage firms to relocate and to sell their goods at more competitive prices. We really need to get our high tech manufacturing into high gear.

Chalcedon said...

That's firms to relocate here where it is cheap. Perhaps he ought also to explain when deflation and falling prices is actually going to happen!