Morning:
8°c
Darling forecast of recovery 'optimistic'
Nicholas Cecil, Chief Political Correspondent5 Jan 2009
ALISTAIR Darling's prediction that the recession will be over by half way through this year may be too optimistic, Downing Street admitted today.
Just six weeks after the Chancellor made the forecast, No10 stressed it was the Treasury's "best view" at the time of the pre-Budget report.
When Mr Darling delivered his economic statement to the Commons on 24 November, many economists were deeply sceptical about his claim that the downturn could be over within about eight months.
Now, Gordon Brown is not ruling out that the recession could last two years and Business Secretary Lord Mandelson is also not denying that it could be long and painful.
Downing Street rejected suggestions that there was any "inconsistency" between the views expressed by the three men but No10 appeared to distance itself from the Treasury's forecast.
The Prime Minister's official spokesman said: "The Treasury have to set out their best view, which was their best view at the time of the PBR. It was a view that was very much in line with the view taken by the Bank of England.
"But they also acknowledge that there is obviously uncertainty around any forecast."
Only days ago, senior economists lined up to warn that Mr Darling's hopes of an early recovery may be optimistic.
Instead of a revival beginning mid-2009, a survey of 67 economic experts found that most think Britain will remain in a slump for an extra year.
Unemployment is likely to peak at three million and house prices will continue to fall throughout this year, many believe.
Asked on BBC TV yesterday whether the recession could last for two years, Mr Brown said: "I think that depends on the level of international co-operation."
Later he added: "If we spend a pound in Britain, it can have twice the effect if other countries are doing the same."
Meanwhile, Barry Potter, a director at the International Monetary Fund, warned that the global economic slowdown would be a "particularly sharp problem for the UK government to handle in the next year or so".
Mr Brown was also starting on a week of hard campaigning to convince voters that his plans would protect and create jobs and that the Tories would stand aside and let families suffer.
He was meeting business leaders with Lord Mandelson in Whitehall today and embarking later this week on a three-day regional tour to show the Government was listening.
Work and Pensions Secretary James Purnell derided Tory leader David Cameron for promising help while also promising to cut spending and taxes.
"It's like those diets that say eat as much as you like and still lose weight," he told the BBC. "It's too good to be true."
No10 pledged to "create or protect 100,000 jobs" by bringing forward spending plans from future years on repairing schools and building transport links.
However, while Mr Purnell claimed they were "new jobs", government officials confirmed that only a proportion would be newly created. Critics also pointed out that the £10billion funding had previously been announced.
Reader views (7)
just how many of the government growth forcasts and government debt projections have been anywhere near the mark
- Jeremy E, London, 06/01/2009 12:53
Report abuse
These two belong under the big top of Billy's Smarts circus, wearing red noses and over large shoes whilst their car (our Country) disintegrates around them.
- Roger, Surrey, 06/01/2009 09:51
Report abuse
It's a bit like saying the Titanic was ' a little low in the water!' The really worrying thing is that there are still a significant number of people out there who think Brown and Darling are the best combination to get us out the mire .... I'll have a half of whatever they're drinking!
- Paul, London, 06/01/2009 09:39
Report abuse
Of course it's optimistic who you think was around creating this UK weakest economy of them all (IMF figures)?!
- Jacqueline, Hampstead, London, 05/01/2009 17:52
Report abuse
'Baldrick' Darling couldn't forecaste that tommorow will be Tuesday, since today is Monday.
As for 'Broken' Brown and his Broken Forecasts, has finally grudgingly admitted on the 'Andrew Marr' show on Sunday morning, that the recession could go on for a number of years. The fog of New Labour's lunacy maybe finally being penetrated by the cold light of the Fiscal Dawn. However, 'Broken' Brown and his Bumbling Bampots are still living in their own 'Fantasy Island' of their version of how UK society should be.
Roll on 2010 when the next general election is due - assuming that 'Browken' Brown hasn't either sold off the UK to some Oligarch, or that he has engineered a National Emergency just like Uncle Bob Mugabe so that Lie-bore can stay in office for ever and a day!!
I do not trust any Labour Minister or Spokes-person to tell the truth anymore - and that is a sad state of affairs!!
- Uncle Vanya, Chelmsford UK, 05/01/2009 16:55
Report abuse
Nobody can take this Brown' guy seriously. Look at British pound...
- Steveo, London, NW1, 05/01/2009 15:38
Report abuse
Has Gordon finally drunk enough over the Xmas break to admit the truth. Its like watching a pantomine unfold and unfortunatly Gordon thinks of the British Public as the back of the pantomine horse. Is he finally waking up to the fact that we are in the Brewn Stuff or is he too busy creating a 100,000 new imaginary jobs to care. More Port Gordon??
- Stuart, london, 05/01/2009 15:21
Report abuse
