The UK financial meltdown

I think my view that the UK economy is on the edge of an abyss is well known but here is some more evidence to mull over.

1. The Telegraph reports that:

"The Treasury Select Committee will join the growing list of economists and analysts telling ministers to give more clarity about the public finances.

Without more detailed plans to reassure the financial markets who lend to the Treasury, the cost of paying interest on the Government's debts could jump, the MPs will say.

The Labour-majority committee will today publish a study of the Treasury’s pre-Budget report, which drew criticism in December for not giving enough detail about how the Government will bring the budget back under control.

The committee’s report will put Gordon Brown under greater pressure to outline future cuts in public spending at the Budget in March, just weeks before a likely general election.

That could clash with Labour’s election strategy. The Prime Minister is resisting pressure to admit that spending will have to be cut to curb the deficit, which will hit £178 billion this year. "

When even the Labour dominated Treasury Select Committee thinks that the Labour government is not giving enough information about how the unprecedented deficit is to be tackled, you know that time is running out for Gordon Brown.


2. Alex Masterley has made a welcome return from his Christmas break with a post disecting

"the government's spending outturn, which came in at £617.9 billion, and the Oxford Economics report which said that UK GDP per capita is lower now than it was in 2005."

Here's Alex Masterley's conclusion:

"The best solution is to cut spending back to mid-2000 levels, suffer the pain and rebuild the economy on a more realistic basis.

Let us hope that the media start to bite on this."

Not now they won't as they have the diversion of a leadership challenge.


3. The Telegraph reports that

"Fears that Britain may be heading for its first sovereign debt crisis since the 1970s hit a new intensity after Pimco, the world's biggest bond house, declared that it is starting to sell off its holdings of gilts. "

This is a story that needs to be more widely reported but I suppose it is considered too tricky for the masses to understand and the BBC would never report anything as downbeat for Labour as this.


4. Whilst the BBC talk up the economy at every opportunity, I read that:

" U.K. consumer confidence fell in December by the most in more than a year as expectations for the economy deteriorated, Nationwide Building Society said.

The index of consumer sentiment declined five points from the previous month to 69, the biggest drop since November 2008, the customer-owned lender said in an e-mailed statement today. A measure of consumers’ economic expectations in the next six months fell eight points to 101. "

The UK economy is really in deep s**t.