Forum Topic

The Real Big Story: The UK economy continues to shrink under Gordon Brown

According to the BBC:"The UK economy has shrunk for six consecutive quarters for the first time since records began in the 1950s. " UK gross domestic product (GDP) contracted 0.4% between July and September, and is a big surprise as almost every City analyst expected positive growth of around 0.2%. "An unexpected decline in the services sector was the key factor behind the drop, with the distribution, catering and hotels sector performing particularly badly. "Since its peak in the first quarter of 2008, the UK economy has slid 5.9%. "The contraction seems to further support the theory that recovery will be slow and painful, with unemployment remaining stubbornly high for some time to come. "The Treasury forecasts that GDP will contract by a total of 4.3% in 2009, recovering to growth of 1.3% in 2010. "And total government debt is projected to rise to £1.4 trillion, nearly doubling to 80% of GDP. "The worse-than-expected figures are likely to make the Bank of England consider extending its policy of quantitative easing. "Quantitative easing is the central bank's policy of printing money and using it to buy bonds from banks and other companies to help stimulate the economy. "Sources: Office of National Statistics (The Government's own statistical service) and the National Institute of Economic and Social Research Story from BBC NEWS:http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/7789844.stm

David Giles ● 6061d9 Comments

I would have to agree that Osbourne is also ignorant. King is trying to gain the high ground in the post-electoral bloodbath at the FSA.

Colin Murphy ● 6056d

" Is it because the Labour Government is preparing the UK to join the euro ?"Sounds frighteningly plausible to me!

Mick Brent ● 6057d

Mick,I will not attempt to defend massive Bankers's Bonuses of the scale we have seen mentioned in relation to US private sector banks such as Goldman Sachs recently. They are obscene. Nor will I condone the payment of huge bonuses to the employees of state owned or partially state owned banks such as RBS or Lloyds. However, even if the total value of the Bankers Bonuses are added up aned confiscated by the Government, they would still be a drop in the ocean compared to the massive public sector debt and defecit Imprudent Gordon Brown has got this country into. And any penal taxation has the effect of killing the goose that lays the golden egg.Apologists for the Labour Government need to explain why the UK economy has now dropped from fourth place to seventh place in the world (behind Italy) and why the UK remains in recession whilst our major competitors have moved out of recession.Apologists for the Labour Government must explain why the pound has now plummetted in value against the euro to almost par. Is it because the Labour Government is preparing the UK to join the euro ?This Irish recently voted for the Treaty of Lisbon out of desperation because of the state of the Irish economy brought about by its adoption of the euro and the consequent easy and cheap availability of credit and over-supply of money.Could it be that the Labour Government now feels that if they mess up the economy even more badly, the British out of desperation will accept the euro and the deeply flawed undemocratic Treaty of Lisbon ?

David Giles ● 6057d

Hardly a Labour smokescreen when George Osborn and Mervyn King, the governor of the Bank of England have both recently come out strongly against them - obviously they are as "ignorant" as I am.I wouldn't disagree with you about the utter incompetence of Gordon Brown, but I think the bankers' bonus issue isn't simply about party politics, it is about public morality.

Mick Brent ● 6057d

Bankers' Bonuses are taxable at 40% and 50% so the Treasury does very well out of the money Bankers based in Britain make for Britain, and for themselves and all the people they buy goods and services from.The furore over Bankers' Bonuses is just a smokescreen thrown up by Labour to disguise the very real problems of the British Economy after 12 years of incompetent Gordon Brown being in charge.

David Giles ● 6057d

By the same "ignorant" argument we should be praising the drug dealers, burglars and thieves for all the money they make, which eventually filters back into the system through the "multiplier effect" in terms of consumer purchases, money laundering etc. These bankers are the reason why we are in recession and they should be punished for it, not rewarded. How many of them actually pay the appropriate levels of tax on their incomes in the first place? Tax avoidance is one of the perks of being rich.

Mick Brent ● 6060d

It's such a shame when this view is peddled from a position of ignorance.About half (or so) of those £6bns of bonuses will revert to the treasury and the balance spent on consumer goods, services etc. also generating further tax, spending and so on. It's called the multiplier effect of money and is probably one of the best chances of pulling the country out of this recession.

Colin Murphy ● 6060d

"So my question is where the hell is all this money going ?According to The Centre for Economics and Business Research (CEBR), up to £6 Billion of it will be going to Banker's Bonuses. Having bailed the bankers out, the public is now expected to stand by while they reward themselves for their failure. Lord Griffiths, vice chair of Goldman Sachs, said on Tuesday that the public should, "tolerate the inequality as a way to achieve greater prosperity for all". After all, he said, "If we said we're not going to have as big bonuses or the same bonuses as last year, I think then you'd find that lots of City firms could easily hive off their operations to Switzerland or the far east,"What a terrible loss that would be (NOT!!!)

Mick Brent ● 6061d

This really is bad news. Printing money that is not supported by growth is just putting off judgement day.When the cuts come, they will be savage no matter who wins the next Election. I for one believe that this has been caused by successive Governments of both right and left failing to invest in manufacturing industry and new technologies. Add to this the burdens placed upon small buisness by over taxation and regulation is it any wonder we are in this position. I run a small buisness 10 employees and when the crunch came our Bankers who had been bailed out withdrew our overdraft facility overnighteven though our sales were very good, they then demanded their money be repaid immediately only by scraping the barrel dry could we survive. Many of our customers got the same treatment and folded, we are just hanging on, we can`t lend the money to fulfill orders, or invest in new equipment,vehicles or staff. So my question is where the hell is all this money going ?. Oh and by the way our new Bankers are offering to lend money at 7.5% not bad when you think its our money they are lending at 0.5% 

Robert Ayres ● 6061d