Turn on and listen to any TV reporting from Britain. Pick up any newspaper article. Read any blog. The story’s the same – one of collapsing confidence. Whether it’s the levels of consumer debt built up, the decline in house prices or the surge in the price of goods or the level of taxation, there is no mistaking the result – shock, anger and depression that the easy years are over.
The pain is being felt across the country in a way that hasn’t been seen since the early 90s, when Britain suffered high interest rates trying to comply with the government’s policy to fit Britain inside the ERM – the Exchange Rate Mechanism which has since become the Euro.
The pain then was quickly relieved. The Pound fell out of the ERM. Interest rates and the level of the currency were able to fall making Britain competitive and pricing people back into work. The government’s reputation was shot, but the path to economic salvation – the abandonment of the policy was quickly achieved.
The 2008 downturn is not going to be so readily reversible. Interest rates will be allowed to fall at some stage but as inflation is surging, it is not going to be easy to drop them to ease the plight of borrowers and consumers, and the Pound will not fall if interest rates are kept high. Much of the inflation is caused by the inefficiency of the public sector, and that is going to get worse before it gets any better, as Labour will not readily dismantle the client state they have spent ten years creating.
There is in short exactly nil room to manoeuvre as regards economic management. The pain of a consumer recession will bite across the country and there is nothing Brown can or will do to stop it. The result will be the build-up of a level of frustration and anger against the government, which it is unlikely to survive. But with Brown at the centre, who has spent all his life waiting for his moment to rule, he is not going to release the reins easily and admit that he’s in a situation of his own making, which is now totally beyond his control, and which he can do nothing to rectify.
His woeful leadership skills will become starker by the day as Britons suffer and worry about their future. The country is sliding into a black hole.
The downturn however is well overdue, and part of the reason it is so severe is the time the period of growth has lasted. This has permitted the government to spend money on an industrial scale into near total waste, and not suffer any consequences. Now reality is biting and the folly of government waste will have to be corrected. Businesses too will have to make changes to survive, and quickly adapt to shrinking markets. Individuals will have to adapt too, and ensure their efforts become more productive. Brown will be gone before long. Britain will have the chance to become a better place. The cloud of gloom is vast and dark, but so too is the silver lining much thicker and shining brighter.
Consumer confidence fell to -24 in April, down from -19 in March, figures from the GfK NOP show. This is the lowest level of consumer confidence since November 1992.
Howard Archer, of Global Insight, the economic consultancy, said: “Pressure is mounting on the Bank of England to quickly cut interest rates again despite current elevated inflation levels and risks.”
See also Telegraph HERE
And it’s not only about money. British society is poisoned by political correctness. See P.D.James in The Telegraph.