The economic outlook is grim

I have been predicting a bad recession for quite a while now and it amuses me when I read predictions that house prices may be only static this year or may only drop by 3%-5%, they are going to drop by a whole lot more than that. It amuses me even more when Gordon Brown states that “Our strong economy is the foundation...and with unbending determination, in 2008, we will steer a course of stability through global financial turbulence. “The global credit problem that started in America is now the most immediate challenge for every economy and addressing it the most immediate priority...But just as we withstood the Asia crisis, the American recession, the end of the IT bubble and the trebling of oil prices and continued to grow, Britain will meet and master this new challenge by our determination to maintain stability and low inflation.”. The fact that Gordon Brown also vowed keep inflation and interest rates low is just the icing on the cake.

The FT report that "Britain this year faces the most difficult economic conditions since the dotcom bubble burst, according to the Financial Times’ annual survey of leading economists, which shows deepening pessimism about the impact of the global credit squeeze. The annual survey of 55 top economists shows confidence has tumbled from a year ago. The experts also fear that compared with 2001-02, the scope for financial authorities to mitigate any downturn is far more limited. Nearly nine in 10 think public finances are not in good order so there is no leeway for discretionary tax cuts or increases in public expenditure, and the third most-mentioned risk to the economy is inflation, limiting the ability of the Bank of England to cut interest rates."

Do read the rest of the article but beware it will leave you feeling profoundly depressed.


As Martin Weale, director of the National Institute of Economic and Social Research, said: “The public finances are in very poor shape . . . HM Treasury has managed several years of self-delusion. No doubt it will explain that it did not foresee the credit crisis and use this as an excuse.”

"Delusion" now where have I heard that before recently? Oh yes, here...