The British budget.

[Legbiter]

So everyone's favourite Darling has published the Labour budget which includes measures which will indebt the Treasury to levels barely seen in living memory.

I sense that RH is absolutely boiling over with his quiet, English rage, and Sheilhb trying to remain polite about the whole clusterfuck but the fact stands, Britain is skint.

Are the Tories going to sweep the board when Brown finally calls for elections, or can New Labour manage to hang on by the fingernails.

Plus, will Iceland be upgraded from an exporter of terrorism, to a small nation hard hit by the financial crisis?

Background info from the Economist

http://www.economist.com/opinion/displayStory.cfm?story_id=13527695&source=hptextfeature

[Sheilbh]

Labour's screwed as long as Brown's in charge.  I think Labour could win if we ousted the dear leader, replaced him with someone palatable and with ideas (Purnell, in my opinion) and then have a relatively snap election.  I also think that Labour will elect someone very different if they're electing a Prime Minister than if they're electing a leader of the opposition.  Harriet Harman is not a plausible PM, she's a hideously plausible leader of the opposition

I think they should follow the Mandelson strategy.  Make big cuts, in the name of austerity and fear of national bankruptcy, and proclaim those cuts in the public sector.  All the while maintaining an interventionist economic policy so that the British economy can come out of the recession well and then challenge the Tories: what else do you want to cut?  What businesses and banks do you want to let fail?

The Tories will probably sweep the board.  But, I don't think it'll be for long.  I think the danger is that having had a Tory landslide and 18 years of savage conservative rule followed by a Labour landslide and 12 years of benign rule that we'll have another Tory landslide.  I think that may happen but because of the situation any government will be inheriting over the next 4-5 years, due to the debt, the economic situation, the state of sterling and so on, will be relatively short-lived and unpopular.  I think we may be going back to political ping-pong like the period after MacMillan ran out of steam.

[Richard Hakluyt]

I thought the budget was a stunning display of intellectual and moral bankruptcy 

The fact that Britain is broke is one thing, we have been there before and pulled together to regain a modest prosperity, but the budget totally ignores the plight of the economy.

Darling's predictions of growth are absolutely risible and were blown out of the water more or less on the next day with the release of further gloomy figures. The ridiculous "efficiency savings" will, of course, fail to materialise. All the necessary painful measures are postponed till 2011/12 when this government will be long gone.

The state is simply too big as the government spent to the max during a period of temporary prosperity, harsh cuts are required. According to estimates I've read at least half the future deficits are structural and unrelated to the current downturn. A good start would be to instantly abolish the surveillance state that these idiots are so keen on.

The economy itself is proving more resilient than expected; instead of having the worst recession in the developed world we are now more in the middle of the pack, much less decline than in Japan and Germany for example. I would say a good half of our problems are actually down to this government and I am incandescent with rage that when the tories win the next election I will probably cheer and drink some celebratory beer; it is almost inconceivable that a government could be so bad as to create this situation, but there it is.

[Richard Hakluyt]

BTW legs, the treatment meted out to Iceland was a fairly typical Brown move. The man is a bully, amongst his other failings, and it's not as if Iceland could kick back.

[Brazen]

According to the BBC's budget calculator, I will be £70 better off a year. Woohoo!

What I totally disagree with is their "green" measures. More coal-fired power stations and carbon sequestration to leave the problem to future generations? Scrappage? £2,000 trade in for electric cars with an infrastructure that will never work and the carbon just being moved further up the line? My big fat green arse.

[Richard Hakluyt]

I actually watched the entire budget speech, feeling that it was a turning point. we were given a steady as she goes speech. I think this will lead to the downgrading of our debt rating some time over the next year or two and, ultimately, we will have to call the IMF in.

[Zanza]

I read about concerns regarding the British debt a couple of times lately, but I don't quite get the panic about it. Even with the massive expansion you are facing, you'll still have a lower debt than say Japan or Italy and about the same as the USA, France, and Germany.

[Richard Hakluyt]

The problem, as I understand it, is that much of the British deficit is structural rather than a problem specific to the current recession/depression. The government appears to be in denial about this and has passed up another opportunity to start putting things right. The government reminds me of those farmers in Oklahoma back in the 1920s, before the run of wet years came to an end and the dustbowl created; they have treated 10 exceptionally good tax years as a norm and created a state sector to match those receipts. The government is avoiding the hard choices as there has to be an election next year, which they would like to win, but pretending that all is well is damaging to confidence.

[Sheilbh]

I also think the UK is in a difficult position because unlike the US and EU our currency isn't a reserve currency for anyone.  People can (and have) just dumped Sterling.  This must be terrifying for Labour given that I think almost every Labour government ends with a Sterling crisis

[Warspite]

I also think the UK is in a difficult position because unlike the US and EU our currency isn't a reserve currency for anyone.  People can (and have) just dumped Sterling.  This must be terrifying for Labour given that I think almost every Labour government ends with a Sterling crisis

But the anti-euro crowd keep insisting over at the Paradox forums that keeping the pound strengthens our autonomy in economic crises. 

[Richard Hakluyt]

Well, having our own currency has permitted us to effectively devalue it, which is helping exports and preventing deflation getting a grip. It is the principal reason why we are no longer bottom of the heap in the damage caused to economies by the depression.

Opposition to membership of the euro is not necessarily the preserve of morons, it just looks that way 

[Sheilbh]

It is the principal reason why we are no longer bottom of the heap in the damage caused to economies by the depression.

Oh let's not be too positive about our situation.  It's mostly that numerous other countries managed to rush to the bottom faster than us

Although we're far from done.  I was doing a report in work the other week and found that the first quarter's number of commercial property deals (retail included) was under half last year's.  And retail's especially hurting bad

[Richard Hakluyt]

I humbly apologise for being too positive about our situation 


What I'm trying to do is to separate the fundamental strengths and weaknesses of the economy from the actions of government. So far I would say that the economy is proving to be more resilient than many expected, on the other hand the government has proven to be an even more second-rate bunch of party tribalists than expected.

The situation is bad and the plunges in output look set to continue for some while, which is why I used the term "depression" in my previous post without adding any caveats.

[Sheilbh]

What I'm trying to do is to separate the fundamental strengths and weaknesses of the economy from the actions of government. So far I would say that the economy is proving to be more resilient than many expected, on the other hand the government has proven to be an even more second-rate bunch of party tribalists than expected.

The rot starts at the top.  Brown's been a dreadful PM and Labour really need to replace him and get some ideas.  And I think Brown is personally responsible for the pure and nasty tribalism of politics.  What he's been doing for a decade within the party he's now doing to other parties (far less successfully).  He's taken his Treasury bunker mentality with him, with nasty and useless people surrounding him like Balls and McBride.  Even his eye-catching promotions haven't worked.  Jacqui Smith's an absolute failure and Miliband's not really impressed. 

When looking at Brown (and Cameron and Clegg, actually) it does make you think just how good a politician Tony Blair was.

Edit: The one promotion that's worked is Mandy but I believe he's always had a rep as a very good Minister.

[Richard Hakluyt]

Reflecting on the situation whilst having a bath, I think I was wrong to say that Brown was a party tribalist. If the country's credit rating is reduced and the IMF called in it could well be the end of Labour as a major political party. Yet he apparently courts this possibility with his policies. After 12 years in Downing street perhaps the man is totally detached from reality, or maybe he simply doesn't care about anything apart from his personal position.

I believe that Labour would still lose the next election if they adopted sensible policies immediately. However, they face a generation in the wilderness at best with their current ones, whereas doing the decent thing now could see them back in power within 5 years.