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Darling: City worst hit by recession
Paul Waugh, Deputy Political Editor16 Dec 2008
CHANCELLOR Alistair Darling came under fire today for admitting that the City would be "more severely affected" than elsewhere by the recession.
He said the combined fall in tax revenues and stamp duty because of a sluggish housing market had hit London the hardest.
The Tories said this proved Labour had left the country ill prepared for the crisis and contradicted Prime Minister Gordon Brown's boast that the UK was "best placed" to ride out the storm.
Mr Darling surprised MPs last night when he said London's difficulties were a result of its being a major financial services centre.
The European Commission and the IMF are predicting that the UK will be the hardest hit in the developed world.
Questioned by Tory MP Adam Afriyie over this forecast, Mr Darling replied: "London is the major financial services sector of the world. Of course we are likely to be more severely affected as a result of the profitability being reduced and I've made that point on many occasions. We're also affected by the downturn in the housing market because of the reduced revenues in relation to stamp duty."
His comments follow Olympics minister Tessa Jowell's warning that Britain is facing a recession "deeper than any we have known".
However, Number 10 sources insisted that the UK was still better placed than many countries because of its historically low debt.
Today shadow chancellor George Osborne told the Evening Standard: "First, Tessa Jowell, and now Alistair Darling himself have admitted that Britain is predicted to have one of the worst recessions in its recent history.
"This flatly contradicts everything they have told us about how well Britain is prepared. It must mean that they already know that Gordon Brown's recession plan isn't working.
"This is a stunning admission of the true disaster that Gordon Brown and the Labour Government have visited on the country."
Reader views (5)
I know all too well about the Job losses; I was the System Admin of a growing company and my new year present was getting booted out of the company in a time that no one wants to employ. So I ventured in the global market and I have started working on contract projects, I think everyone just has to suck it up.
- Parisa, Birmingham, 19/03/2009 07:45
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The reason that London has been the driving force behind the last recession is because the Government got rid of all major industries in the north, we do exist outside London you know
- Lisa, Birmingham, 09/01/2009 16:01
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It is the City of London which has for more than a decade driven the recovery of the UK from the last recession and has created great wealth for the country. This wealth has indeed been unevenly spread but should London suffer a severe downturn, and it will, then the whole country will suffer. Outside London there is now very little of any economic relevance at all and the money that our global business centre brings in sustains us all. The damage that London is suffering and indeed is yet to suffer will be painful for all. And what is going to replace it....
- Trevor, London, 16/12/2008 13:10
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The UK has been worst hit because we have no capable government and we have more and more stiffling socialist bureaucracy and taxes. In the mean time crime is up and there is no one to catch them. I still have to see the first financial crimecatcher here - in the USA they already caught and are pursuing several criminal bankers and hedge fund manager here in the UK we are doling out money to them and still await any REAL action.
- Georgie, Islington, London, 16/12/2008 12:46
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Given that this country is predominantly jealous of the wealth and its generators, this news will raise a few spiteful cheers around the country.
However, this sector provided huge revenues to the treasury that will be absent going forward. So the cheering masses will be taxed harder for longer and their benefits will have to fall.
Enjoy this fleeting moment of mirth whilst you can.
- Dave Davies, Basingstoke, 16/12/2008 12:07
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