Sunday, April 05, 2009

I Was Wrong: Darling

They say that confession is good for the soul, but what good will it do for the economy? Yes even after all the positive vibes from Gordon's 'budgetesque' speech presenting the G20 decision in the week the Chancellor is finally fessing up.

Sadly not to the fact that the Government could have done more to ease the bust phase when they were claiming to have done away with 'boom and bust'. Not that they could have done more to regulate the banks to keep up their capital levels to prevent them taking so much risk. No, all that Alistair Darling is confessing to is that his forecast of a recovery this year was wrong.

It will mean that he will be adjusting his budget for later this month. It also means that the UK who have lumped all their fiscal stimulus into 2009, while many of the rest of the G20 had spread theirs over 2 years, are alone in thinking it was a short sharp downturn. Not only did the Labour government ignore the warnings from the Liberal Democrat's Vince Cable and team, but when they did realise it they still did not realise how bad it was, even with banks and financial institutions falling and struggling around their ears they failed to gather the true significance.

This Government still believed that they truly had eradicated boom and bust even as the bust was starting. In the pre-budget statement last November Darling has now admitted that his prediction of how bad it would get was only one third of the story, so far. Darling said:

"We have to be realistic about this. You cannot, you must not, build up false hope."

Wow! Well in that case do we look forward to an honest budget? Do we get to hear the phrase, "we do not know how long or how bad this will get" followed by "but we intend to do" then listing the measures taken to aim for that improvement? I doubt it, suspect the chancellor will still be making promises of just what and when the country will be back on track. If he doesn't I will of course eat my words and say he has taken his own advise.

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