Darling And CBI Look Beyond Recession, Others Still Staring Into Abyss
It’s Budget week, and apart from getting to do that holding-the-red-suitcase-up thing, Alastair Darling has to generate the confidence that he’s turning the economy round. The opening salvo is a YouTube video where he stands in front of a vague wishy-washy painting to make some vague wishy-washy platitudes. He opens with some stuff about getting ready for the big day, sounding like a nervous bride, but then says he’s looking to the future, citing things like the creative industries and green technology as being areas for job creation. Well, wonderful, but frankly the whole thing could do with some bombastic editing and disorientating zooms to get us actually hyped up about beating the recession. Consequently it’s only got 640 views, or 52,000 times fewer than Susan Boyle.
But despite contriving to make Web 2.0 seem dull and dogmatic, Darling’s confidence comes as there are a number of signs that the recession might have gone past its worst point. CBI announced today that GDP has so far fallen 4%, most of the 5.1% total that they forecast; they expect recovery to begin in a year’s time.
They join manufacturing organisation EEF, who said: “For the past six months manufacturers have been grappling with a collapse in global demand, but attention is now turning to preparing for the upturn”. David Miles, of the Monetary Policy Committee, said last week that he saw “green shoots” in the economy. Also using that phrase are the head of the Dallas Fed, and Ben Bernanke, head of the US Federal Reserve, who used it last month on TV show 60 Minutes, and said: “Recently we have seen tentative signs that the sharp decline in economic activity may be slowing.” And much was made last week of Obama’s “glimmers of hope” speech, which, if you’re still given to taking his word as gospel, announced America’s passage into prosperity again. The stock market has been listening to all this and reacting accordingly. And housebuying is on the up too.
But don’t take out that 100% mortgage just yet, because various leaders have been queuing up to chuck a bracing bucket of cold water on these optimistic scenarios. The Organization for Economic Cooperation and Development (OECD) said on Saturday that the world was still in a period of “extreme uncertainty”, and that the recession would continue well into 2010. Obama meanwhile reformatted his botanical metaphors, swapping nice green shoots for a scary-sounding wood: “We’re not out of the woods. This is still a difficult time for the economy. Credit is still contracted”, he said at the weekend. Head of the European Central Bank, Jean-Claude Trichet, said: “I would not overemphasise whatever we are observing… let’s be prepared for a very difficult year”. Quelle bummeur!
But king of the pessimists is Paul Krugman, who reminds us via a bullet-pointed list that we’re still very much screwed: “1. Things are still getting worse. 2. Some of the good news isn’t convincing. 3. There may be other shoes yet to drop [??]. 4. Even when it’s over, it won’t be over”. That’s right – the recession is here to stay. Forever.
Posted by Ben Beaumont-Thomas in Hot Money | April 20, 2009 11:41AM |