The depth of the downturn was stopped by £200 billion Quantitative Easing, and yet, according to the NIESR, the downturn has only been arrested, not turned around.
If QE has to be stopped, which it must at some point, the second leg of the depression, maybe another 3/4% to add to the 7% since April 2008 will follow.
Government annual revenues in April 2008 were £606 billion. They fell to £496 billion by April 2009. Darling forecast them as being £498 billion to April 2010, and he repeated this figure in the PBR.
Yet the NIESR says the economy remained in decline until August. It seems unlikely that the £498 billion to April 2010 revenues will be achieved. Reveneues are more likely to be £440 billion.
That would mean Darling’s borrowing figure will also be out – an underestimate by £60-odd billion. That will look bad in the pre-election budget, won’t it?
Well no, actually.
In December 2009, a mysterious £60 billion was lopped off the reported spending totals, which puzzled everyone. The £680 billion forecast fell to £615 billion in the December Treasury Spending Outturn Report.
Osborne stated that the government was cutting spending.
(In fact it was an accounting adjustment).
My guess is that Darling has reset his spending to match his declining revenues so he can claim he has hit his borrowing target when April comes.
And people say Greece has meaningless financial statistics.