out of recession.
So what does this mean for "Mr No-more-boom-and-bust" ?The news this morning is that Japan is officially out of recession, joining France and Germany who confirmed last week that growth had returned to their economies in the second quarter of the year; and Hong Kong also recorded growth of 3.3% in the three months from April to June. If Japan's latest quarterly rate were maintained for a full year, the economy would grow 3.7%.
In January 2008, Mr Brown said:
“By being prepared to take difficult decisions about pay, about being prepared to take difficult decisions about the public spending round, we’ve put ourselves in a better position to withstand a global turbulence that is affecting every economy.”This is, was and remains a complete lie. British national income continued to shrink by 0.8 per cent over the same period, although the performance was an improvement on the 2.5 per cent contraction in the previous three months.
The International Monetary Fund have always forecast that Britain will be the last major economy out of recession, and most international commentators agree that because our economy was in a worse condition to begin with we will suffer more than most economies as our over borrowed and overheated property and financial markets unwind.
Separate data earlier this month showed unemployment in the UK rose by 220,000 in the three months to June to a total of 2,435,000, the highest figure for 15 years.
Leading economist David Blanchflower, a former member of the Bank of England monetary policy committee, has said: “Unemployment is going to increase for many months to come. There is a huge amount more to do.” Some estimates put unemployment in the UK peaking in 2010 /2011 at over 4m.
The facts are pretty bleak; as usual Britain's 'economic good times' have been built on little more than asset price inflation financed by borrowed money, (Rising house prices and lot's of remorgaging for you and I, and rising share prices and lots of take-overs for the City). Our economic growth for much of the last ten years has been a mirage based on speculation whereas in France, Germany and Japan economic fundamentals remain based on sound money, real industrial output growth and increasing productivity gains.
This crisis has been caused by a loss of confidence in the long term sustainability of the level of borrowings and lasting confidence and stability will not return in Britain or America until the level of borrowing by Government, companies and individuals has been reduced significantly.
This can happen only one of two ways, either the debts have to be paid off, or they have to be inflated away, or more likely a bit of both. In any event this will take decades, not months and the British Economy will be constrained to very slow growth or face rampant inflation and a currency crisis - just like we were for the first three decades after the war - for a long time yet.
We remain a nation of speculators. Successive Governments have allowed people to believe that the best way to make money was not to start a business making something, or to buy shares in industry, but to invest in property.
Gordon Brown certainly didn't start that problem, but his ten years at the Treasury and especially his tax treatment of pension funds (which was a huge deterrent to people making pension contributions and drove people into iether spending their money or investing in other assets) was a huge contributing factor.