How Brown wrecked the UK economy

[Incontinenta Buttox]

If there is a measure of Gordon Brown's fiscal irresponsibility it is the fact that the UK is probably going to lose its AAA rating from Credit agencies - the fact this is even being discussed should trigger a vote of no confidence in the Government.

This is not because of the "global financial crisis", though that is the proximal cause. The real reason is that Gordon Brown oversaw an economy which kept interest rates too low, because the wrong measure of inflation was chosen in order to "align" the British economy with that of Europe. This created a dangerous property bubble and allowed struggling businesses to limp along, putting off the day of reckoning, and giving an entirely false impression of the health of the UK economy.

Despite inflated tax receipts which arose from the interest rate-led boom, which happened despite the greatest rise in taxation in British peace time history, Gordon ran a fiscal deficit since 2000. When the wheel came off, all those struggling businesses collapsed together, tax receipts plummeted, especially from the financial services industry and Gordon's vast bloated client state, which has achieved precisely nothing for the billions pumped into it, is no longer affordable. Because we, the taxpayer have taken on the liabilities of the financial services industry - RBS's balance sheet for example is the same size as UK GDP (yes I know, a financially illiterate comparison, but it illustrates the size of the problem the UK faces), Britain has gone from a relatively low debt economy, by means of an 8% deficit and the "bail out" to a highly indebted economy, and done so in a matter of months.

The Credit rating agencies can see how much the UK needs to borrow simply to manage that debt, and realises that the markets are simply not going to swallow that issuance at the rates being offered. This may be reflected in a downgrade to AA status, as has already happened to Spain, and the markets are pricing in here. If this happens, a Gilt auction will fail, triggering a run on the pound and Britain will have to go cap in hand once again to the IMF. This will not be the fault of the "global financial crisis" but will be the fault of Gordon Brown.

It is difficult to immagine what this means unless you're a finance wallah. There are only a handful of countries who have NEVER defaulted on their debt - the USA, Switzerland and the UK amongst them. The UK managed to finance 2 huge wars with a depression in between - the debts from which were finally paid off (by which I mean debt reached pre-WW1 levels as a percentage of GDP) in 1992 and 2000 because of Conservative fiscal prudence. Since they abandoned the Conservative spending plans in 2000, the Labour party reverted to type. They've taken the best economy in Europe, and made it into the worst in a little over 8 years - the UK economy is more ruined than it was in 1945 and this means the UK is no longer a good credit risk.

That's the heroic scale of the incompetence we're dealing with, people. They've bankrupted us again. And what is so depressing is the sheer tawdriness and lack of vision. They've ruined everything merely to cling on to power. You might accuse me of offering no solutions, but there is one and it is simple: Embarassingly so. Unemployment is running at nearly 2 million. Much of that is from private sector pain, which needs to be shared by the public sector. There are fewer tax-payers supporting ever more public sector make-work schemes for Labour voters. You need to cut spending by getting rid of millions of worthless public-sector jobsworths. Labour will argue that this is "taking money out of the economy", which would be true if these people were doing economically useful work, but who will miss a Diversity outreach co-ordinator?
Fire a Labour voter today for the good of the Country - what are you waiting for?

[The Super Pope]

Britain has the second strongest economy in Europe. I don't recall it ever being stronger than Germany's, not since the 19th century. I wouldn't say Britain's economy is the worst in Europe, after all Albania, FYR Macedonia, Portugal, Spain, Greece, Poland, Sweden, France, Netherlands, Norway, Denmark, Slovakia, Belgium, Itlay and Slovenia are all less economically powerful than us.

[antares24]

well the article was more a political attack on labour policies, but when the author speak about the Uk as the worst economy in Europe i think he speak of its perfomances in this period, Uk budget deficit is at 8,8%, much worst that the other Eu big economies, Germany and Italy are at around 3% and France at around 5%.
Add to this that the Uk has a very high private debt level and his worries about a decrease in the credit agency ratings can be justified.

Just today the BCE warned that today crisis can have an impact on future generations, that translated means: "dear Eu governments if we bail out everyone and keep making debt instead of trying to balance the national budgets our younger generation will be the one screwed, becouse they will eventually have to pay the bill."

Assuming that most people here on the forums are under 40-50, we're royally screwed basically....

[Incontinenta Buttox]

Violent rages, grey pallor, fading eyesight, shaking hands, puppet
generals (Darling, Balls etc) recounting great victories over the Tories,
ranting about saving the world, while his creepy propaganda minister
(Mandelson) predicts ultimate victory - remind you of anyone?

Sounds like the last days of Fuhrer Gordo in the Whitehall bunker
raging about betrayal while spending imaginary trillions to stave off
collapse.

Gotterdammerung for us all!

[cristophe el perno]

Violent rages, grey pallor, fading eyesight, shaking hands, puppet
generals (Darling, Balls etc) recounting great victories over the Tories,
ranting about saving the world, while his creepy propaganda minister
(Mandelson) predicts ultimate victory - remind you of anyone?

Most of those facts are either exaggerated, made up or irrelevant

Sounds like the last days of Fuhrer Gordo in the Whitehall bunker
raging about betrayal while spending imaginary trillions to stave off
collapse.

Gowdin's law on post four. That's pretty damn low, Brown may not be perfect, but comparing him to Hitler is going way way too far.

Gotterdammerung for us all!

Nothing wrong with a bit of optimism. Whatever mistakes Mr Brown made aren't going to get fixed if we all take that attitude.

[Jubal_Barca]

Hip, hip hooray for blind mudslinging. I suppose super-cameron the ubergod will rain mana down from the heavens until sales of it fix the economy?

[Incontinenta Buttox]

All hail the prime mentalist. At a time like this, what we really need is futile gestures.

[The Super Pope]

At a time like this, what we really need is futile gestures.

Ooh, I sense a Peter Cook reference. The Aftermyth of War

[Incontinenta Buttox]

Well spotted with the Peter Cook lift.

Yes there is a Global economic downturn. Yes it did begin in the good ol'
US of A.

These are the desparate platitudes that Brown repeats endlessly to exonerate himself of all blame.

Some of you appear to have swallowed that line and are happy to defend him, but it's time to take the red rose coloured spectacles off. He also said that 'we are best placed to weather the storm', we are not, as exemplified by the run on the pound, and no it wasn't talked down by anyone.

He also said there would be no return to 'boom and bust' when any student of economics should know that any cheap-credit fuelled boom can only end in bust.

He also held up his model of financial regulation as the answer to all evils. That same model that has proved culpable for the mess we are now in by exposing us to the toxic debts wheezed up on the other side of the pond.

He repeats his assertion that he is doing something and that financial stimulus will be that something and that will bring us out of recession sooner. But the only stimulus has been to the hedge funds to further short UK plc and all that it owns.
Billions have been squandered in failed attempts to shore up a financial sector that has proved unworthy of aid.

Every step he takes is short termism with his one good eye firmly on party-political point scoring.

That anyone can still defend this flithy creature is beyond belief.

[Calamari]

Its all well and good having your gripes but what is there to be done about it? What other solutions are out there that we can use? You can't just say "Your idea is crap" without having a better one yourself.

[Musthavename]

Hip, hip hooray for blind mudslinging. I suppose super-cameron the ubergod will rain mana down from the heavens until sales of it fix the economy?

Brown won't fix it. If he called a general election and the Tories won, Cameron won't fix it. Only time will fix it.

What concerns me, is how reckless Brown is going about trying to fix it. What it means, is that the recession will be more or less similar to what it would have been, but the aftereffects of the recession will be worse, coming in higher taxes in order to pay back the huge debts the Goverments collating. Point is, if Brown hadn't spend so much when the Boom happened and saved some money, the UK would be far better placed to take the hit of a recession than it currently is.

The problem lies in one simple fact. Any extra money that filters down to people, via the VAT cut, or interest rate cuts, or any other cuts, won't for the most part be spent, but saved. People are frightened of losing their jobs, and they need a reassurance that they can at least try and survive if that happened, hence they save money, which won't get us out of recession. What will get us out, is once house prices have fallen to a certain point, people will be able to afford a mortgage, without the spectre of unemployment worrying them too much. Then banks start lending to a degree again, companies start getting credit, job cuts stop coming, and the recession ends. Apart from making sure the banks survive, there's nothing much the Goverment can do.

The other thing annoying me about Labour, is they're trying to get Lending to return to 2007 levels, which caused the recession in the first place! The world has had access to too much credit year upon year since the millenium, and now it's going cold turkey. What needs to happen is careful lending to resume, which simply takes time.

[Incontinenta Buttox]

Unlike any previous recession, and thanks to 11 years of Brown's mismanagement, we are actually ENTERING the downturn on the verge of bankruptcy.

We therefore have to get through this with less recources than any other nation. Before we had north sea oil, but that has nearly dried up. Before we had money from privatising national assets. but all the family silver has been sold off.

The rest of the world appears to be clearly aware of this fact, and are beginning to regard Britain, and particularly it's government, as some sort of economic pariah.

Our problem isn't just economics. It's a problem of leadership, competence, and above all, international confidence.

Labour and Brown can give us none of those.

[Calamari]

Theres no point whining about what could have been. The fact is we are in the mess we are in and the only thing we can do is try to find a way out using what we have, not what we would like to have if could. We need to get out of this rut with less than ideal options.

I don't know any solutions, im not an economist lol.

[cristophe el perno]

Throwing money at the banks sounds stupid, but so far none of ours have actually completely fallen apart, they may be close, but they ain't gone yet. Nor has any UK saver lost his/her savings.
Now in a situation where Brown hadn't thrown money at the banks, several would have collapsed, possibly taking the entire banking system with them. The situation now isn't perfect by any means, but it could've been so much worse.
What would you or Cameron or Thatcher or whoever have done better?

I'm not a new Labour supporter by any stretch of the imagination, but I honestly can't see what Cameron would do any better.

[jsktrogdor]

I dont really know much about the UK's economy, but there was a full page article in USA Today yesterday about it, weird coincidence? It was hard to tell if they were being unbias'd as a foreign news source, or being bias trying to make the US look better by making the UK look worse. But from the sound of the article things are pretty rough over there? They said there was going to be a "wave" of layoffs in the comming months and some proffesor they spoke to said the only way to solve it was "wholesale nationalization".

[Musthavename]

What would you or Cameron or Thatcher or whoever have done better?

Not done the absolutely pointless VAT cut?

[Calamari]

Not done the absolutely pointless VAT cut?

I agree that vat cut was a waste. Working in a shop I saw the customers save about 12p on what they bought, people didn't care. It just made giving shange an absolute nightmare.

An income tax cut might have been felt better by everyone.

[Denny Crane!]

I doubt any government could fix the economy since governments are pretty much incapable of fixing things, just breaking them.

If a government then spends vast sums of money they don't have, which we will pay for the rest of our lives no doubt, and still fail to achieve anything or indeed make it worse. Then thats probably not good.

Of course Brown Apologists will try and have it both ways. He presided over the biggest period of growth in the UK (it wasn't global credit based disaster looming) but when we sink into recession its now global.

We also ignore the fact that he has recklessly spent money, ruined pensions, overtaxed the economy and expanded public employment massively.

I think something which is probably going to affect us just as hard is successive governments failure to deal with the public pension time bomb because of fear of unions and strikes. Something made worse everytime the public sector expands.

[Carach]

i find it amusing that his approval ratings have risen since the recession began because people "trust him to get us out of it".

it was him that made it this bad in the first place. but nobody cares whats in store another 10 years down the line when he 'gets us out of it' this time ?

having said that, there isnt much this country can do anymore besides being crazy on the tax front to make income.

Face it lads, Britain's still on its way down. and its thanks to decades of idiotic government. as much as i hate brown our problems are not entirely down to him... to be fair he doesnt have much room for maneuver if he wants to make a success out of the economy for his party (because thats all it ever is now, shift the coming depression to the next person in office...)

I dont really know much about the UK's economy, but there was a full page article in USA Today yesterday about it, weird coincidence? It was hard to tell if they were being unbias'd as a foreign news source, or being bias trying to make the US look better by making the UK look worse. But from the sound of the article things are pretty rough over there? They said there was going to be a "wave" of layoffs in the comming months and some proffesor they spoke to said the only way to solve it was "wholesale nationalization".

bolded bit would be correct, relatively. considering the cluster thats been going on with the US economy..but yea..lots of layoffs and us uni students wont be getting jobs could be worse tho, personally speaking for myself here.

[Calamari]

Ah so the brit econamy goes down hill and Brits start emmigrating to find jobs. I hope they get the same treatment as migrants here do.

Ofcourse not all those would be emigrants are the bigotted people we have at the moment.