Wednesday, June 24, 2009

Get A Grip Darling

Saint Vince has done it again. A week since the economic god warned to take talk of the end of recession depression with a large pinch of salt, a leading economic think-tank has come up with the same stark conclusion, warning of dire times ahead. And tough-talking Bank of England boss, Mervyn King, has once again stuck the boot in, telling useless Darling to get a grip on his huge deficit.

If only this fag-end government would for once play it straight with voters instead of an endless game of economic cat and mouse and political point scoring. They may even pick up a few votes from a public who prefer honesty to a daily dollop of Brown sauce.

The recession is very far from over warned Cable in an article in the Independent last week: "What we are seeing is an economists' and financiers' recovery rather than a real one."

And back in that real world of real people with real fears and the real economy, the UK is predicted to sink further into the red than any other major developed country next year, in a grim warning from The Organisation for Economic Cooperation and Development (OECD).

At a stroke this blows out of the water the government's cunning plan to spin a recovery in time for a general election and put up deluded Brown as the only true saviour of the world.

The mother of all economic crises seems "mysteriously to have vanished" said Cable, in the face of a "determined counter-offensive by the forces of optimism". This diagnosis, he warned, is profoundly wrong.

Now with a stark message, the OECD has revised down its forecast for the UK economy in 2009 and warns the UK is in "a sharp recession" with output set to contract by 4.3% in 2009, worse than its previous forecast of a 3.7% fall.

But the worst is yet to come. The OECD predicts zero growth in the UK economy in 2010 and says the UK budget deficit will hit an eye-watering and totally unacceptable 14% of GDP next year.

Echoing the views already expressed by Saint Vince, the OECD calls on the UK government to cut back the ratio of debt to output which is set to be a lasting legacy for generations to come.

Something has to be done about it. Now. Not leave it it for the other lot to clear up after the election.

This UK forecast is much worse than those the Treasury made during the Budget. It's the worst in the developed world.

"Public finances have deteriorated sharply" warns the OECD, particularly concerned over the size of the UK's budget deficit. And that came as Bank of England governor Mervyn King called for tough action to tackle the "truly extraordinary deficit", firing off a broadside to Darling's economic disaster plan.

But will the government listen? Will it heck.

Even if the UK reduces government borrowing by a paltry 1% of GDP per year for the next seven years, it will still have a staggering gross debt-to-GDP ratio of 125% by 2017, one of the largest in the OECD.

So much for the recent spin by the National Institute for Social and Economic Research suggesting the recession is bottoming out in the UK.

This is all in stark contrast to bouncy Darling’s optimistic forecast. The OECD projects zero growth for the UK next year which is heading into worst-case scenario territory.

The warning bells are there. But the government isn't listening. Unemployment will soar above the three million mark. Darling is faced with a massive budget deficit billions bigger than he's factored into cloud cuckoo land financial plans.

It all makes for grim reading and blows out of the water the Brown spin which weary voters have to put up with.

Telling people what they can already see every day around them, the OECD reckons UK unemployment, which currently stands at a 12-year high of more than 2.2 million, will "rise substantially" and "labour market conditions will remain unfavourable for a long period".

But the dire state of the economy and what to do about it is being reduced to a daily round of lies from a discredited government set on a collision course with voters.

King and Cable have a lot in common. Both gents of the old school of economics. Both right on the ball. And both seem to live in a permanent state of despair over the debt which is piling up and the mess which is unfolding around them.

When will this discredited government of lies and deceit wake up and realise it's not just Saint Vince and the governor of the Bank of England who can see through the sham? Voters can see through it and feel it in their everyday lives.

Never mind the pathetic party politics and political posturing. It may all make for fun and games at Westminster but people's livelihoods are at stake here.

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