National Wrecker

The fact that our economic output shrank by 5.6% in the 12 months to the middle of the year casts doubt on any claim that the recovery has already begun. The profile of the current recession is now almost identical to the decline in Britain’s output between 1929 and 1931. The 5.6% contraction over the past year almost matches the 5.8% fall in the year preceding the second quarter of 1931. Gordon Brown is now competing with Ramsay MacDonald as a nation destroyer and it looks as if the UK is pretty much tracking the 1930s. Of course, the financial crisis has been much bigger than in the 1930s and the period of boom Brown allowed beforehand is much more marked. True to form, the Treasury forecast in the Budget earlier this year that the economy would shrink by 3.5% this year, but most independent forecasters, including the IMF and OECD, expect a far more severe contraction. The ONS figures also cast doubt on whether the economy will start to grow again before the end of the year. At best we can only expect a slow recovery, held back by high private debts and poor credit availability. It will take until 2013 for the economy is really back on any sort of track. It is likely to be many years before the UK returns to the well-balanced and sustainable mix of low unemployment, low fiscal deficit and low public debts, decent economic growth and low inflation that New Labour inherited.

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