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When will the recession end?

Evening Standard comment
2 Jan 2009


BANG on cue for the New Year's first working day, a challenge has been thrown down to the Chancellor over his forecasts for the economy. The annual Financial Times poll of economists suggests most believe Mr Darling's expectation that growth will resume in late 2009 is unrealistic.

Most also expect unemployment to rise close to three million and house prices to continue falling throughout the year. There is some good news in that few of the economists polled expect a deflationary spiral of falling wages and prices.

However, today's dissenting voices are making themselves heard less than six weeks after a Pre-Budget Report in which Mr Darling was forced into the biggest downgrades of economic forecasts the Treasury had ever seen. A recent poll suggested that consumers agree with the economists. Fewer than one in five people in Britain believed Mr Darling's view that recession would end this year.

The gap between the Chancellor's official view, along with the even more resolute note expressed by the Prime Minister, and the gloom felt by voters alarmed by the plunging pound and fearful for their jobs, creates a political challenge. By the time of the Budget in March, the Government will need to explain, against a background of yet more high street collapses and job losses, why it believes matters will soon improve.

Measures to support the banks were essential but bailing out financial institutions while small businesses close and jobs go is hardly popular. And Mr Brown's argument that the recession was made in America has been rendered more difficult to maintain by the recent fall in the pound's value against the dollar.

Of course, as the Treasury's former chief economic adviser Alan Budd points out, nobody really knows when recovery will start. Without the Government's action to prop up the banks and its fiscal measures, the outlook would be yet worse. However, the Government has taken a considerable risk in pinning its political fortunes to a near-term recovery.

Slim with Gromit

THE ANIMATOR Nick Park of Wallace and Gromit fame is an inspired choice for a new advertising campaign against childhood obesity. And London's Imperial College is leading the way in surgical treatment for excess weight gain. But the task of tackling a public health problem of immense proportions goes far beyond these steps.

Many modern lifestyles encourage excess calorie intake and inactivity. Encouraging healthier diets and more exercise for children is no easy matter but the Government needs to demonstrate that it is pushing ahead with those initiatives which it has undertaken to bring about a change in their lifestyles. For example, Culture Secretary Andy Burnham needs to show he can deliver more timetabled, compulsory sport in schools. Targets that include optional after-school activities allow the children most at risk of obesity to avoid taking part.

Ofcom's restrictions on junk food advertising to children should be reviewed to assess whether the new rules are having an impact on diet. Meanwhile, the Department of Children, Schools and Families needs to keep up the momentum towards healthier school food created by Jamie Oliver's campaigns, including enabling investment in school kitchens. Making Britain thinner will demand more than commissioning a cartoon.

And celebrating..

LONDON'S New Year. The Mayor's fireworks drew big crowds despite the cold, record numbers turned out for the New Year's Day Parade in the West End and few arrests were made at street parties. Late-night transport was a success. A capital start to 2009.

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