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thank you Robert, I'll have all that in front of me as I listen to the Darling and then I'll get back to you afterwards with what I think are the main conclusions

IOU's or printing presses? Are things really that bad?

Can they announce a new Pocket Calculator Allowance for Chancellors so that Alaistair Darling can buy himself a new one? The one he's got seems broken.

If everytime the story is told it changes, the expectation becomes new narrative everytime. The deeper you slide the nearer you get to being well positioned for uplift, it follows being well placed for a downturn. A new day is a good day for a quick spin.

Been saying for the last two years that the three words that will define the immediate future are 'worse than expected'.
Come to think of it, it would also serve as an epitaph for Gordon Brown tenure as PM.
Remember those words everyone, I reckon we'll hear them a few times today!

#4 glanafon

I think you`re right. How can we put much faith in whatever we hear later today from Darling as time and time again they have been so badly off the mark.

This is part 3 of "The Emperor's New Clothes" where the emperor tries to fill his empty vault by taking gold from the masses. And borrowing back the gold from the swindlers.

The proper thing to do is not to open the taps even more but to plug all the holes and recover all the losses.

The dilemma is that Darling needs to raise taxes to show the markets he is serious in dealing with the debt he now has to repay.

Yet if he raises taxes by that necessary amount he will smother any recovery before it is born.

If the recovery is not forthcoming then he won't be able to get the money he needs to borrow in order to keep this shambles of a government on the road.

The man has to cut spending, cut it hard, and then cut it again. Once he gets the spending cut to where it is felt to be sufficient than he must cut it twice more just for luck.

The only way this country is going to get out of this mess is to work and work hard. There will be no place in such an economy for bureaucrats, spin doctors, public sector consultants, inspectors, traffic wardens, outreach workers and all the ilk whose jobs populate the Guardian vacancy advertisements.

Britain needs grafters not poseurs!

"if it could come up with a wheeze ..."

Haven't we had enough 'wheezes' over the past 12 years ?

Darling has to get , or the game is up.

what the budget must do today is tell the truth...stop playing politics and get back to economics....cut spending, simple as that, but of course no government will do this as the economy takes second place to being re elected to prolong the time at the trough....now gordon comes up with a scheme where mp's are to be paid extra just for turning up to work...

Quantitative easing is Gordon Brown's cunning plan....he offers to sell the debts he has incurred, then buy them back himself with money he has just printed.... it wont solve the immediate problem but will ensure inflation next year, (after the election ) by which time he will have an inflation linked pension....
you really couldnt make this up!

Robert - have you not considered the 15bn of economies in public spending that will be announced? This is the gloss that balances all the figures for you.

I only have one question on the subject. If AD has now found an extra 10bn in savings, why was this waste not spotted before when he announced his first 5bn?

On the subject of borrowings - sounds to me like HMG is creating its own toxic debt.

I have no doubt that this useless duplitious government will act in its own best short-term interest rather than the long-term interest of the country.

Very likely they will take the QE approach, ie printing money, since they will figure that the bloke on the street does not understand this and it will take some time before the inflationary effects are felt.

In order for the country to pay just the interest on the debt Brown has racked up will require something like 5% of GDP. This in turn requires a growth in the economy of 5%+. Since we currently have growth of something like -3% I do not see where the money will come from.

The international markets will also perceive this impossibility and refuse to lend us the money. we can expect to see sterling becoming worthless as a result.

Either we balance the books by cutting public spending and raising taxes, which will kill off the economy in the short-term, or we go for the borrow and spend approach which will leave us with a debt that cannot be repaid.

As you can see, either way the UK economy is completely stuffed. Plan C is for the government to simply default on its debt and we go back to living off the land, if such a thing is possible.

stanilic @ 8

what's wrong with Traffic Wardens? ... get a ticket this morning, did you?

NATIONAL DEBT CLOCK.

NOW !

....dont forget it was only a year ago in his last budget that AD declared there would not be a recession.......he also estimated PSBR at £36billion, revised it up to £78 billion in the pre budget report in November... PSBR was in fact £90 billion..... In other words he hasnt a clue, anything he says is to be taken with a large dose of salt ....

Natch?!

Come on Robert, speak proper innit

Think you will have to look elsewhere rather tha the budget document for information on point 1....

@ 14

a National Debt Clock ?? ... sounds very depressing ... worse than sticking all your bills on the fridge ... no thank you

as far as I can make out they have not actually given a great deal of money away and essentially set up a big insurance scheme which is unlikely to be called upon

also - their investment in bank shares must be looking pretty given their rise in the last wee while

but then again like most people I am probably clueless and talking nonsense on here

In other news average earnings in the year to February rose just 0.1%. Since we know everybody in the civil service got a 2% or greater increase plus marched another grade up the pay spine so probably closer to 5 or 6% increase this means that effectively the private sector has taken a substantial paycut this year.

And since nobody got a P45 in the public sector indeed another 60,000 or so box tickers were recruited last year then the diminishing band of lower paid private sector workers are having to support an increasing horde of public sector 'workers'. No wonder the economy is in the toilet.

I cannot bear though to listen to this budget. The wildly innacurate projections and claiims of 'well-placed' blah blah would have me destroying the TV and send my blood pressure so high my ears will explode.

Post 11 that would be the GBP 15 billion that represents GBP 5 billion already announced in January and GBP 10 billion to come into effect in 2011.

Is budget day a good day to slip out that unemployment rose by 9.2% in the last 3 months?



It must be a good day to bury bad news.

13 sagamix

What is right about traffic wardens?

It is not work is it? Although no doubt it is healthy for the employee.

I have only received two parking tickets in my entire driving life of 43 years and in both cases the warden was wrong.

The only benefit I can see in the job is that it saves people from having to sleep on the pavement in cartons.

However you look at it the numbers are just horrendous. Inparticular the implications of this for The UK economy over the next decade, (or more?)

I shall be looking for a Chancellor that complacently (and deliberately?) attempts to ignore the dire situation for The UK that the numbers spell out. In other words will he be overcome with hubris to the extent that he stridently, "commends this budget to the House, " followed by a rousing cheer from his fellow MP's? THE point is there will be NOTHING to cheer about this afternoon. And if he slips in some "green shoots" comment about house prices starting to rise, this would clearly be totally outrageous, (for which the opposition should mount nothing short of a sustained year long campaign for Darling's resignation.)

If the spectacle does reveal itself like this it will mean that The Chancellor doesn't think the situation is that serious.

This piece is titled Funding Record Borrowing. Irresponsible lending, which was therefore irresponsibly borrowed, is the sort of mentality that got us into the economic mire. This new, unexpected, government borrowing is essential to avoid an even worse economic situation. However, the solution, or rather the choices and decisions about how we pay it back and dig ourselves out of this unholy mess will be made by........Well, who would you rather did this? Frankly I despair that it will be a politician. I would rather it was Alan Titchmarsh. At least he would show us a way to sensibly occupy ourselves for the duration of this nightmare.

The budget that will REALLY matter is the first one after this disreputable band of thieves is removed.

As a middle class taxpayer, I feel as though for the last 12 years I have been asked to pay for a party to which I was not invited.

Now the party has gone wrong and I am being asked to pay for the mess to be cleared up.

In essence, today we get laid out in front of us what we have assumed for a while... and dreaded the official acknowledgement of. It seems that the government will not only need to spice up the acquisition of gilt, but print more currency to balance their own... The pound will be weak for the next couple of years at least, I reckon.

The budget is anticipated to project a bailout cost of £60bn to the UK taxpayer, which i presume to mean money that won't be clawd back in the future "Boom"? I was under the impression that any bailout had been implemented with the intention to reclaim all funds for the taxpayer, and if anything make a profit? Why are we now being told it is going to cost us £60bn? Why can't UKFI hold on to the banks until they are satisified that the taxpayer, through either dividends or the sale value of shares, received every single penny spent on the bailout?
Also, a simple question - what happens if and when the DMO fails to subscribe to its total debt issuance?
I'd really welcome your thoughts on these issues.

I think I'll be looking for the "sorry we got it wrong"

Wrong on our predictions

wrong on the cycle

wrong on the borrowing

wrong on prudence

wrong to think that we could ever run the economy

wrong to force ordinary working people to pay for our mistakes

Robert,
Excuse the simplistic interpretation in this question.
If all countries are affected by the downturn and all have to borrow to stabilise finances, doesn't that ultimately mean everyone owes to everyone else through various mechanisms. Therefore is the ultimate answer simply to re-finance the global economy to a new lower state and write-off a proportion of global debt. In this way governments can get on with things and no country loses out or gains compared to others.

Every year we get Chancellors predicting this and that about growth, deficits, borrowing etc. in Budgets and pre-Budget reports. Does anyone have any idea how well/badly all Chancellors have been historically with their predictions when it comes to actual figures at a later date? Or is it true that economics is guesswork as opposed to a 'science'?

What I'll be looking for is indications that the UK Government is actually going to manage any situation at all.

I mean by that, for example, the Homeowners Mortgage Support Scheme seems to be totally 'optional' for banks to be part of, or otherwise, as they choose. It seems HMG just did not have the political will to make it regulatory, or indeed to make put it into legislation.

Are the measures published today going to have 'opt-outs' for various sectors that the Government doesn't want to upset too much?

Or are they going to take the bull by the horns and start managing the crisis? (Which crisis? Well anyone you care to choose - vast UK debt, businesses going to the wall, availability of credit, unemployment, homelessness, etc., etc.)

Sadly, I'm not optimistic - but the proof of the pudding will be in the eating, so let's just see what happens.

Maybe Gordon needs a slogan like, "Tough on Recession and Tough on the Causes of Recession". Or does that sound too much like one they've used before?

As I see it this govt is running the country like a company with no bank manager and no overdraft limit.

Times are very very hard so as a company you make as many cost savings as you possibly can and wait for the market situation to hopefully improve; OR you can employ a team of salesmen and fleet of cars and fly them all over the world looking for work and employ all your people building things for when the good times return and stock pile the finished goods.

Unfortunately with a bank manager you are unable to do the second option and if you did he would eventually pull the plug and you would lose a fortune in the process.

As it happens I wonder if the banking shares purchase may not turn out to be a little gold mine for the Conservatives when they get in next year - we need one stored away somewhere coz we haven't got any gold left.

The Chancellor has a problem in that people do not know what date he is quoting his figures from. When he talks about investment, it is difficult to know wether he is talking about new money or things that have already happened. Likewise the continual need to keep increasing the debt figures saps confidence.

What is intriguing is to know what experience any of these people who we have elected into positions of power have to perform these functions. Gordon Brown was in politics a long time before becoming chancellor, bu what was his experience before he became a full-time politician?

If United Kingdom plc were run as a company, would any of these people even get an interview for their jobs? Also if it were run as a normal company, the politicians would have to produce (VAT)receipts to claim any expenses and any kind of misdemeanour in this respect would be a sackable offence.

#28 Strongholdbarricades.

Don't hold your breath!
We'll get a load of waffle about how external factors have affected things - in other words 'it's not our fault, all our sums add up, it's everyone else who is wrong...look a house sold last week, so we must be doing sonething right...'

31 #Sutara

But Gordon Brown, as he so memorably told us, 'has eliminated boom and bust', so how can there possibly be a recession?

#12 wykhamist

"Either we balance the books by cutting public spending and raising taxes, which will kill off the economy in the short-term, or we go for the borrow and spend approach which will leave us with a debt that cannot be repaid."

Or we can eliminate direct taxes, and watch the economy lift off as workers and businesses can spend the fruits of their labour; not to mention the flood of people bringing their business to the UK.

Robert,

" That is to turn public sector debt into money (to monetize it) through purchases of gilts by the Bank of England.

To ease putative deflationary pressures, the Bank of England is doing just that through its quantitative easing programme."

You mention the government's "less conventional" way of funding its deficit by monetizing it. I thought Stephanie said article 101 Maastricht Treaty prohibited governments directly financing their deficits with the purchase of debt instruments. Or is the "wheeze" here that it buys gilts through the secondary market for "putative" deflation easing. No wonder the BoE are choosing their words carefully.

'Politics and the fate of mankind are shaped by men without ideas and without greatness. Men who have greatness within them do not go in for politics' (Albert Camus)

[CUE TOM JONES MUSIC..]

Debt Bomb, Debt Bomb You're my Debt Bomb..

EDDIXON @34

is spot on. There will be lots of soft-soap and passing the buck.

Over the last few weeks Gordon Brown has spent huge energy setting things up with the IMF.

I was puzzled and thought it was because he was looking to borrow cash, but it turns out he was looking for them to whitewash bad news.

And this morning, the IMF announce that the 200 billion they estimate Britain spent on the banks was incorrect,things are not that bad after all.Such luck! Housing market positives and IMF endorsement when he most needs it.

I'm beginning to sound like a conspiracy nutter so I had best sign off.

#28. StrongholdBarricades wrote:

"I think I'll be looking for the "sorry we got it wrong"

Wrong on our predictions

wrong on the cycle

wrong on the borrowing

wrong on prudence

wrong to think that we could ever run the economy

wrong to force ordinary working people to pay for our mistakes"

Actually, it's the big banks that should be saying sorry.

We should be thanking the government for taking such difficult decisions in an attempt to prevent the entire economy - and society - from collapsing.

stanilic @ 22

Traffic Warden as a Non Job? ... sorry, can't agree at all

no wardens, people would sling their Iron Horses all over the place - things would get cluttered up, obstructions galore - general slowing down of the pace at which people can get about their business - cost the economy dear - increase the PSBR, though hard to say by exactly how much

I may be being commpletly thick but looking at the figues isn't it the case that because the UKs debt is so LOW we can afford to borrow more to fund our necessary fiscal expansion?

Why is everyone implying that our debt is high when it's not?

please bear with me and help because I don't understand.

According to the guardian , the UKs public debt is 47.5% of GDP compared to US 60.8%, France's 63.9% and US 170%.

So it's not debt but net borrowing (is that what uk has to borrow each year?) thats the highest ever.

My dumb conclusion is that having net borrowing high is good because we need a fiscal stimulus because we're in a recession so hurrah for high net borrowing made possible for LOW levels of UK debt v GDP.

Can someone explain where I'm going wrong and why no-one is saying that we have low not high debt.

v confused,

Butey

#41 rbs_temp

I suppose it might be seen as churlish of me to point out that whilst you are technically correct, the only reason the banks were able to go crazy was because of the government adopting it's infamous 'light-touch regulations'.
The banks are organised with one purpose in mind - to make as much money as possible. If the person responsible for overseeing them stops paying attention and tells them to do their own thing, who is to blame when they go made and destroy the system?
Yup, the only reason the government is having to make the 'difficult decisions' is because they screwed everything up in the first place and are now trying to blame everyone else.

eddixon @ 35

But Gordon Brown, as he so memorably told us, 'has eliminated boom and bust'

no ... tory boom and bust ... and he has

Nicely set out Robert.
Just getting comfy now and ready for the off

this country is sinking in debt due to government ineptitude and todays budget will only proove that this lame duck government has bleed us dry and borrowed billions funding poorly run banks, keeping them afloat trying to compete with overseas countries.
will this be the last budget from our current government or will they blind the voting public bamboozle them with terms and statistics that the majority will believe them yet again, thats the plan i fear nothing for joe public in the budget.

Here are a few thoughts:
1. No bonuses for any managers in the public sector until the govt finances are under control. The only exception would be people doing a front line job where their life is in danger or there are other extreme circumstances i.e. armed forces etc.

2. Pay cut for all senior grades in public sector making over 100K

3. 50% cut in all public sector legal budgets. 95% cut in legal aid budget for 'human rights' cases. With less lawyers involved all the useful programs will move faster.

4. Every quango, scheme and department with a mission to 'help industry' or 'invest in technology' should be closed immediately: they are a job creation program for civil servants. Instead have a law that all pension funds have to invest 10% in shares of manufacturing and technology companies (i.e. not financial services and government debt), 2% of which has to be venture capital. A second law should force banks to assign a proportion of their lending to technology companies and manufacturers rather than focussing on mortgages and property. Use any savings from cancelling the existing schemes to reduce corporation tax for exporters. If the govt really want to rebalance the economy then mickey mouse schemes wont do it, it takes serious realignment of investment.

5. This bailout should be funded by taking a proportion of the assets of the people who caused the problem and the wealthiest group who benefit most from saving the banks. Not the income of normal taxpayers who had nothing to do with it.

6. Raise the pension age to 75. This will need to be done anyway, may as well get it done now.

7. Stop messing about with windmills and build some new nuclear power stations. Invest some serious money in fusion research (UK spends more on mobile phone ring tones than nuclear fusion). Build the severn barrage.

8. Encourage people to work from home over broadband connections. This will save much more energy on transport than all the road pricing and railway building.

Edixxon,

I suggest 'Ambitious but Rubbish' a la Top Gear would be a more appropriate epitaph.

"We should be thanking the government for taking such difficult decisions in an attempt to prevent the entire economy - and society - from collapsing."

Please.......tell me this is irony

The banks were not controlled by the regulation that this prime minister brought in. Failed regulatory system that was to eliminate boom and bust. Gordon Brown is the constant in the equation. Economic genius, heralded for prudence and stability.

Its a sick joke really, he is still there, not only there but now in the top job without the blessing of the electorate.

We need an election rather than another budget, I am no tory btw. People need to feel part of the democratic process and I feel this is the way. Open sensible debate about the future of this country. Others have alluded to fact that this budget will be as much about retaining power as addressing the problems. Cynical, very cynical but this the result of having the wool pulled over our eyes for so long.

#35 Sagamix

true, and so he has, replacing it with his own, new improved Labour Boom and Bust it seems.
Anything the Tories can do, Labour can do better?
My original point was not politically partisan or biased, it was merely the highlighting the folly of making the statement originally.

Post 25, you, me and millions of others.

Anyone married or single that is in work and doesn't have children we all get to pay out and get nothing back.

I totallu agree on comment 48

I love the way that public sector money savings are always from "higher efficiency". If government can be run more efficiently like this, then why aren't they doing it already?

Just looking over the mistakes PM Brown has made since he was Chancellor, why is this man still in a job?

Here is a short extract from his July 1997 Budget Speech:

'The Chancellor is first and foremost the guardian of the people's money. But during the 1990s the national debt has doubled. This year alone the taxpayer will pay out 25 billion in interest payments on debt, more than we spend on schools. Public finances must be sustainable over the long term. If they are not then it is the poor, the elderly, and those on fixed incomes who depend on public services that will suffer most. So, as with our approach to monetary policy, so in fiscal policy: we will now establish clear rules, a new discipline, openness, and accountability.

My first rule - the golden rule - ensures that over the economic cycle the Government will borrow only to invest and that current spending will be met from taxation.

My second rule is that, as a proportion of national income, public debt will be held at a prudent and stable level over the economic cycle. And to implement these rules, I am announcing today a five year deficit reduction plan.

Together, these rules and this plan will ensure a historic break from the short-termism and expediency that have characterised the recent fiscal policies of our country. As with our monetary policy, our fiscal policy will be all the more credible for being open and accountable.'

Its amazing how things change isn't it. Seems like the 'Golden Rule' was undersold down the river along with the other 400 tonnes Gordon might as well have given away!

We in the UK are too polite, perhaps we should start a revolt?!?

#41 rbs_temp

"We should be thanking the government for taking such difficult decisions"

Are you living on the same planet as the rest of us? Thank this Govt??? Are you referring to the same Govt who told us they had done away with boom and bust. The same Govt who told us only a year ago we wouldn't even go into a recession? And the same Govt who told us only 5 months ago that we would be back in growth by the summer?

I'm sure people up and down the country will be queuing up to thank this Govt!

@BeautifulBute

Looking at the volume of borrowings only tells a part of the picture. The other part is the cost of the borrowings and the repayment terms. The US government has historically been able to borrow unbelievably cheaply. This is because US government debt was seen as one of the safest investments around and the likelyhood of the US defaulting was supposed to be practically zero. The US has therefore been able to rack up a colossal volume of debt, but the burden of that debt would be much much smaller than if the UK were at the same relative debt volume. Under current market conditions, where the possibility of the UK not being able to meet its repayment commitments becomes very real, the UK can't get nearly as good terms on its borrowings. They are therefore more expensive and have a correspondingly higher burden.

#4 glanafon
#6 jd6969preston

...and others with the same theme.

The answer is you cannot believe the Chancellor - anymore than you could believe that infamous chancellor who came to power in Germany in 1939.

The Government is in panic, it's only course of action is to try and lie it's way out of trouble.

It believes (and tries to convince everyone) that if we regain confidence in the system then it will recover. He believes that if he cannot do this by actually demonstrating why we should be confident then lying about confidence will produce the same result.

HE IS WRONG.

Think about it, if I am selling items which are over-inflated from their true value by 30% and people stop buying it because they realise this. If I simply convince them that they are worth my valuation, and that they should pay that amount because they can always 'earn back the extra through their wages' - then I appear to have solved the problem.

However, when I then expand my business by 30% (with the excess profits) so I can produce more, the price will begin to fall and the devaluation will happen again - but faster and harder as it will be harder to re-inject that confidence as people realise I am a liar.

Successive Governments have been playing this game since the 30's. This is why we sit on the biggest bubble and at some point it will burst. Simply pumping more hot air into it does not solve the problem - just delays it until the future - but making it worse in the process.

Take the housing market - as most people are familiar with it.
Currently the average house will cost the average wage earner 6 years salary - compared to 3 times in 1950 (and even that was a long term bubble but data is unreliable before that)

To be accurate I believe the value of a house is what it would cost YOU in TIME to build it. For example, to build my house might take me a year - so therefore there is no need to pay 6 years wages to buy one. It makes no sense as I could simply take the year off and build it myself.

Now I am no expert builder, so it might only take a builder 6 months to build my house - however that is factored in as I am an expert in my field and therefore should be getting paid a rate that equates to the length of time an expert would take to build my house (6 months)

This is the level by which we are over-inflated in this market. All the Government is doing is re-inflating bubbles and this occassion is no different. At some point in the future (if it's not this time) the people will realise that the true value of a house is only 6 months salary plus materials and land cost.

The two additional elements of land and materials are also inflated. The cost of the bricks should only be the cost to create them - however included in that cost is the over-inflated value of the 'brick makers' houses via their wages, plus the over-inflated value applied to the finished product in order for the brick manufacturer to make profit and pay for his over-inflated property.

Land is again an over-inflated amount, usually caused by the incorrect belief that 'there isn't much land left to build on in Britain' and the random nature of planning laws which restrict building in certain areas - both of which of course are exasperated by the lack of investment in public transport and insistance of nearly everyone having to start work at the same time (9 am) as people are drawn closer and closer to work to reduce commuter carnage - producing another man made bubble.

The net result of all this is that at some point the 'revaluation' will occur and suddenly no prices will be reliable. We will hit a downward deflationary spiral which won't stop until we meet 'true value'. Although this might be nasty - re-inflating the economy as the Govt. is trying at the moment will only make this worse.

The hobsons choice the Government face is that the devaluation that's required will creat massive social unrest - so every Governemnt does it's best to avoid the inevitable because no-one wants to be 'that Government' who has to implement martial law in order to maintain control.

Information provided by

48. tom_edinburgh

"Raise the pension age to 75. This will need to be done anyway, may as well get it done now. "

This is the second time I've heard reference to this recently.

My understanding is that there is much evidence that those over about 50, if they end up out of work, often have extreme difficulty in regaining employment, especially employment that in any way matches their professional experience or qualifications.

So perhaps the U.K. will find itself saving on paying pensions, but funding huge amounts of other benefits, JSA and the like, for the 50 plus age group in our society.

I'm just not very confident about how wise moving the pension age would really turn out to be, as it would seemingly just buy into that problem.

Why, when the recession is finally over, should not the government make a profit (yes PROFIT) from the bargain prices paid for the banks etc.?

#44. eddixon wrote:

"I suppose it might be seen as churlish of me to point out that whilst you are technically correct, the only reason the banks were able to go crazy was because of the government adopting it's infamous 'light-touch regulations'."

True enough. But relaxation of oversight and regulation has been a global phenomenon, and in this country the Conservatives were in favour of an even lighter touch, believing absolutely in the infallibility of the free market. With hindsight it is easy to say what should have been done but the fact is that this crisis would have happened even if Cameron had been in power, which is why it is unfair to blame Gordon Brown and his government for the mess we find ourselves in.

#60. Manelech wrote:

"Why, when the recession is finally over, should not the government make a profit (yes PROFIT) from the bargain prices paid for the banks etc.?"

And they will make a very good profit indeed. They have picked up majotity shareholdings in some of our major banks for next to nothing, and it is possible that once the economic cycle reverts to growth they will make enough profit to completely cancel out the entire cost of the financial bail-out.

For those wanting an increase in the pension age the current Labour government have already started down that line.

rbs_temp

"the fact is that this crisis would have happened even if Cameron had been in power, which is why it is unfair to blame Gordon Brown and his government for the mess we find ourselves in."

If Cameron and the Tories had been running the country for the past 12 yrs - and did everything exactly the same as Labour - I would have exactly the same opinion toward them as I do for this Govt.

You constantly want to give this Govt a 100% pass without placing a single once of responsibilty on them by saying it was a global problem so it was out of their hands. I'm a realist and I accept this is a global problem and there is a large share of blame to go around for the financial service industry. I don't put 100% of the blame for this mess on the Govt but I do feel they certainly played their part. It flabbergasts me that you believe the this Labour Govt is some kind of victim in this financial crisis.

Taking the example of the Canadian or Australian Govts - they didn't create the problems either and they are also feeling the effects. But they were better managed and the kept tighter regulation on their financial services. As a result they will be in a better position than us here in the UK a year or so down the line when growth does return. While countries such as Canada or Australia can rebuild and move ahead we will be stuck under an avalanche of debt. This is something we can hold Labour accountable for and which cannot be just dismissed a a "global" problem.

61 rbstemp

that's all true but utterly irrelevant. The conservatives could have been in favour of an official declaration of the moon being made of green cheese for all I care - they weren't the ones in power who took the decision. The Labour Party was and they are the ones who deserve 'recognition' for that.

Will this budget mean Gordon Brown breaks his Golden Rule lol

#60 manelech

Only if the Government can restart the Economy will they make a profit from the shares in the banks. As this requires more public spending (or spending cuts) to stimulate the Economy then they will need to borrow more in order to 'get their return'.

It's a bit like the gambler who remortgages his house for cash because 'this dead cert will clear my debts'

There's also the currency valuation. We may make a 'profit' from the selling of the shares - but as this might be in 'Gordon Zimbabwean sterling' - it will be worthless to anyone outside of the UK.

It will be like me giving you a 30% pay rise (which you would be happy about) - but simultaneously increasing the cost of all your purchases by 40% - a NET LOSS.

That's the reality of the situation - it's a big gamble and if it comes up Darling will be a hero - if it doesn't the UK will fall into social and political unrest.

Many people shy away from inflation (whether deliberately introduced or not) and for good historical reasons. But in the present circumstances it has a lot to be said for it. Not only does it help to offset the many deflationary pressures, but helps government finances both to provide services and to fund major new projects such as the proposed (and much-needed) North-South rail link (assuming that they be got off the ground without a decade of public consultations).
Essentially, the debt problem was caused by the privatisation of money creation, and the Keynsian solution is to nationalise it again, so that the 'profits' go to tax-payers rather than tax-avoiders.
Or to put it another way, inflation is a tax on money. Those who have the most (perhaps made the most from the debt boom) pay the most. Those of us in debt get a reprieve.
Is that really so bad?

I listened to the Chancellor's speech. He didn't answer your first question, did he, Robert?

The markets answered your second question by hardly batting an eye.

The answer to your third question came straight from a place called Wonderland.

By the time all the debt has accumulated it will be of the order of $2tr. How on earth can this country handle debt of that magnitude?

#65 edixxion

....this is an unwinnable argument for both sides - red or blue as the original idea for de-regulation of the markets came from Thatcher (via Friedman).

When will you people look beyond simple colour coding and realise it's the system of Capitalism that causes all this. If it were down to one Government or another then the public would have worked out which one and they would remain in power.

We could elect a bunch of apes from London zoo to run this country (no jokes please) and if it ran a Capitalist Economy then it would end in the same result.

You can argue about the symptoms until the cows come home - I am only interested in the causes and this is clearly Capitalism.

Otherwise you spend lots of time arguing about which sneeze caused the cold - when in reality it's a virus and nothing to do with sneezes.

The most important thing is for everyone to realise that whoever wins the next election - NOTHING WILL CHANGE.

haha AD forecast growth of 3.5% in 2011........has the UK ever had this magnitude of growth even during the boom? His assumption that debt levels will be halved in four years is based on consumer spending at boom levels....surely we are not going back to that madness?

I am not a Labour supporter; but this needs saying;

"The bankers, of all types, investment, retail, boutique and the Market people, fx traders,cds traders/issuers, speculators and every other category of financial animal in the world....... are TORIES."

They are the Tory party, always will be the Tory party can never be anything else but Tory but the bloggers on here think that they would have prevented this!!!!!

I don't normally believe in the American prostitution of our language; but just once... GET REAL!

Conservative party = Bankers, Brewers and Landowners.

You working class tories and small businessmen clamouring for their return are in cloud cuckoo land.

Unless your t/o is in the £100 million plus range the Tory party cares about as much for you as they do for a rising pheasant, though they would probably take more note of the pheasant.

The socialists attempt to look after too many people who should be left to a Darwinist solution and they are certainly riddled with single issue faddists, eco and sexual fascists, the result of too many middle class kids looking for jobs that don't involve real work, but at least they pay some slight attention to ordinary people even if motivated by their own careerism.

The Tories as saviours from their own, doesn't even make me chuckle.

God help us…… as this Government will not……. it does not have a clue! Unless you are in the top 1% or the bottom 5% this budget is going to do nothing to you or for you other than tax you and tax you hard.

The government continues to spend what it does not have on the off chance that they can scrape a victory in the next election. And if they don’t win then it will be all down to the Conservatives to put right. Sound familiar?

By the way I can not believe that there was not more challenge from yourself, Nick and the others reviewing the budget speech to the predicted outturn: Growth next year! And not only growth but growth over 1% with 2 ¾% the following year. How can these figures be so different to those of any other institutions or pundits? The IMF is forecasting contraction of just under 1/2% next year that is nearly a variance of 2% against the Chancellors forecast. Why such a difference or is it just, that he, along with the treasury are just out of their league and can not cope with the current situation. There does appear to be an inability to accept responsibility for the current situation or even the it’s severity.

Finally, unless they change the culture of the public sector they will never deliver savings on the scale needed. The question we have to ask is have they ever actually delivered savings? If those identified in the Gershon review and the last spending review SR07 were achieved we surely would have seen the benefits come through in the various budgets and spending plans. I would suggest that all that they did was to rearrange the deck chairs moving costs from one department to another and or create new departments to warehouse costs. Surely there should be a challenge set to the NAO to report on the actual savings achieved rather than just those declared. Otherwise it is just like Turkeys voting for Christmas.

rbs_temp wrote:

Being a person of no political persuasion I find it frustrating that we have individuals who follow and support parties blindly. I am originally from Wales and historically you could have put up a donkey for election to represent Labor and by God did they put some donkeys forward. I was hoping that this was not still the case and at least we the electorate would challenge our politicians and when appropriate hold them to account. Not only has this government brought this country to its knees through miss management of the economy; it has acted immorally taking us into an unjust war and now would appear to be rotten to the core. In time gone by a minister would have fallen on their sword if they were caught stepping out of line. Now it appears, as far as New Labor are concerned, there is no line. Because without trust a politician has nothing and how can you trust ministers; who claim what at best can be called dubious expenses, have to leave government not once but twice under a cloud Etc. Etc. So please, yes let us all get involved in politics, but let us hold all our representatives to account because unless we do we will only get what we deserve. We just have to look at recent history to see this is the case.

74# naturaleconomist

You ask for us all to get involved in politics.

I am surprised that being a regular contributor to these blogs you have not realised that the pitiful level of intellect on display here is probably in the upper quartile of the population.

I shudder to think what grunts the rest of the polity are meeting the current circumstances with. It is quite likely that 50% do not even know of the recession or could even name the prime minister.

To go back to your request for us all to get involved, I would rather "All" kept out of it, kept their "gut reactions" to themselves, lived their puerile existences, stayed tuned to "The NEW Jane Goody's Celebrity Big Brother on an Outing to Romford with Blankety-Blank and Squares!" and just got on with being meaningless consumer masses.

#75 Moncursalion-Monochrome!

Amen

Yesterday in British parliament will go down as a watershed moment in modern history when so called New Labour returned our country to the envy of class politics and discredited Old Labour economic policy. Debunked thinking that made Britain the sick man of Europe in the 1960’s and 70’s. It took a decade of reform through the Thatcher years to rectify these structural impediments to a free, thriving economy. We then enjoyed the fruits for the next decade and half before sound economic management and rigorous regulation were progressively peeled away. It was this laissez-faire, casino capitalism approach to the leadership of the UK that has brought the world to its knees. Forget the sound bites about this being a global problem, our government sets the laws and economic framework for the UK no-one else.

The decision is raise the marginal rate of income tax on high earners to an eye watering 61.5% together with a further erosion of long term investment opportunities in pensions pushes our nation into a position where it is more now far more attractive to set-up business as an entrepreneur and corporate leader abroad rather than in the UK. Tax experts and respected bodies like the IMF immediately commented that these measures were largely cosmetic and likely to cost more to administer than the revenues raised. Additionally, the tax, accounting and financial planning industry will now see a return to high demand for their services as individuals seek to mitigate the impact of this brutal, envious tax regime. As a caller to a radio station said yesterday ‘when anyone, individual or business experiences more than 50% of their income lost to government there is something morally wrong’. How true.

Living with banana republic debt levels imposes a stranglehold on UK PLC finances such that taxation of all forms has to be sustained at economically crippling levels with the rest of the world simultaneously asked to take on faith our request for IOU’s that are needed to bridge the funding gap and that our children can honor with timely repayment in the future. We will have to see whether the international investment community is prepared to swallow this.

Finally, it can only get a lot worse. The governments optimism that the recession will end soon and pre-boom rates of growth return in a little over 18 months time really do stretch the notion of credibility and sound judgement. If, as seems more realistic, the contraction lasts longer than this assumption and growth comes back at a more moderate pace along with some elements of deflation then UK PLC is really bust.

What are odds for the government increasing the rate at which they are printing money. A return to 1970‘s inflation? In such a scenario we will then have travelled back 40 years to the start of the last cycle like this. Take your choice - deflation, hyper-inflation or stagflation.

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