CBI Bums Everyone Out By Saying Recession Won’t End Til 2010

The constant upswing in the banking sector means everyone’s paying back their government money at such a rate that it’s starting to make last autumn seem like a bad dream. Paul Krugman, speaking in yesterday’s Observer, said that he thought Britain’s recession was over. RBS economist Ross Walker said that we’d have growth in the third quarter of this year. The phrase “green shoots” is bandied about with increasing frequency. But those miseryguts over at the CBI just had to piss on the bonfire, with their assertion that there wouldn’t be any growth in the UK until 2010. 

They’re pointing to credit conditions still being unfavourable for businesses, but have at least improved their forecast from April. “We are past the worst but we can’t say with any great certainty that the recession is over”, said Richard Lambert, the CBI’s director-general. Lower incomes and higher unemployment are going to eat away at growth, thanks to none of us having any money to spend any more, or if we do, we’re putting it into savings. The expenses scandal has distracted government from tackling the recession more aggressively; Lambert expressed disappointment at credit not being given to the UK car industry when it’s been needed.

This is also the week when everyone crosses their fingers and hopes that people want to buy our debt. In order to keep public spending aloft, Darling announced that we’d be taking on record levels of debt to fund it. This involves selling it as bonds, and those sales are going to continue in a big way tomorrow, with as much as £5bn-worth being sold.

Even if we do return to growth, the impact on real people will lag a quarter or two behind; unemployment is set to peak in 2010, and then tail off throughout the year. There’s still a lot of pain to be had while recovery trickles down. Thanks a lot CBI! Bummer Monday or what.

Posted by Becky North in Hot Money | June 15, 2009 11:13AM |