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Darling: We are far from through this recession
Joe Murphy, Political Editor07.01.09
ALISTAIR Darling today admitted the recession is "far from through" and signalled dramatic new measures to promote recovery.
"In the current climate, no respon- sible finance minister could say that's the job done, far from it," he said. "We are far from through this."
His comments, in an FT interview, were described by shadow chancellor George Osborne as "a stunning admission" that official forecasts in November's pre-Budget report were wrong.
The Chancellor also said that new measures to stimulate recovery were being considered, including giving authorisation to the Bank of England to print more money.
With interest rates, now two per cent, set to fall tomorrow by half a point or more to the lowest level in more than 300 years, he made clear that the Bank would need to work "hand in hand" with the Treasury. Interest rate moves will cease to have as much sway as rates near zero, forcing a need to look at other options, including "quantitative easing", where money is created to buy up assets and state debt.
"Frankly, if you were to do anything further, this is something that could openly be done with the Treasury and the Bank of England working hand in hand because the two responsibilities just become so close you have to operate together," said Mr Darling.
He confirmed that new moves to promote bank lending to businesses are on the way - officials say probably within weeks - but insisted they would require international action to succeed. "It's not one single thing that would be sufficient," he said. "The problem is a worldwide problem because ... all the big significant banks trade in every part of the world."
Mr Darling's comments come after economists, and even the Prime Minister's Office, admitted that forecasts of recovery beginning later this year, made in the pre-Budget report, were over-optimistic. The Chancellor said that the prediction had been "based on the evidence we had at the time", implying that the spring Budget would unveil more pessimistic figures. The Treasury denied, however, that he had already torn up November's figures.
Mr Osborne seized on the comments, saying: "Alistair Darling seems to be admitting that the Government's forecast for the economy, made just a few weeks ago, was wrong and the recession could be much worse," he said.
Mr Osborne added: "That is a stunning admission that Labour's policies for the recession aren't working, like the expensive failure of the VAT cut, and have merely added to the growing national debt."
He called for urgent action to get banks lending again, including the Conservative proposal for a national credit guarantee scheme, an option the Treasury is considering.
Economists were divided on the wisdom of the Bank trying to kick-start recovery by quantitative easing, an option unthinkable just months ago.
The Chancellor is not ruling out another multi-billion pound recapitalisation of the banks and - as a last resort - full-scale nationalisation.
Tax break for low-income earners
■ A big income tax cut for the low-paid could be in the spring Budget, a close ally of Gordon Brown said today. Plans to raise the tax-free personal allowance to £10,000 from £6,035 are being considered, said John McFall, chairman of the Commons Treasury Committee. It would mean anyone earning under £10,000 would pay no income tax at all. Higher earners would also benefit but by a smaller proportion. "We should put money into the pocket of those with the lowest incomes," said Mr McFall. The idea was "in the Prime Minister's mind".
■ Gordon Brown's Cabinet "away days" have cost taxpayers £600,000, it was revealed today. Three full meetings outside London designed to show the Government listening to slump-hit Britain are costing about £200,000 each to stage - two thirds of which is spent on security measures. Mr Brown today began a three-day tour of the regions, climaxing in the Cabinet gathering in the North-West - a key area for marginal seats at the next election.
■ Tory business spokesman Alan Duncan was unrepentant today for going on a skiing holiday rather than a shadow cabinet tour of slump-hit cities. He was said to be staying at the five-star Fluela Hotel, Davos - where double rooms can cost £400 a night - for the 53rd Anglo-Swiss Parliamentary Ski Week. Conservative chairman Caroline Spelman was also booked to go but delayed her trip to take part in David Cameron's political push. Mr Duncan said he was on duty over Christmas and was due a break.
Reader views (26)
Here's a sample of the latest views published.
Surely now is the time for a general election. Why not support the petition to the PM for this.
10 Downing Street
We the undersigned petition the Prime Minister to Call ageneral election in May 2009 We, the free people of this country have laws, rights andobligations that are ignored or are being misled by ourgovernment. In view of this countries perilous condition and toeliminate media speculation the Prime Minister should call ageneral election in May 2009 and not 2010
- Andrew Lees, Halifax
True, and to be made worse by him and his puppet master and accolytes when they get the printing presses rolling. They need to wreak much more havoc before they leave office.
- Hugh, Middx
The recent comments made by the clergy prove the "immoral" economic state this country is in. We should all rise up to this fact, and demand immediate action from this vulgar, pityful excuse of a government.
- Pablo Olivares, Maidstone, UK
Where did that guy come from?!
- Jacqueline, Hampstead, London
Where I used to work.... all the Big Lumps usually came to the surface. So is Brown, Darling, Mandelprat and Pals.... all coming to the suface!!!
- Uncle Vanya, East Anlgia Area UK
Unfortunately this pair can do a lot more damage before they eventually go - you haven't seen nothing yet!! If they follow through with the rumoured plan to print more money to address the credit crunch, then intead of his claim to have "banished bust" Brown could well end up "banishing Boom" for many years to come. Proble is there's absolutely no way he'll call an election before he really has to, which is not until mid-2010. By then we'll all be in the really smelly stuff!!! One pace forward everyone who voted Labour at the last election - it really is YOUR fault. You were warned - "Vote Blair, Get Brown", and that's exactly what we've ended up with
- Malcolm, London
What a ridiculously naive statement!
This chap Darling truly is as daft as he looks.
- Dave, cumbria
Significantly increasing the income tax personal allowance would have more impact on the economy rigt now than any other previous initiatives. To have maximum effect it should be implemented asap. April/May 09 is a long way a away in this current environment.
- Raymond, london
How this Derling guy was EVER employed only God knows.
- Georgie, Islington, London
The Prime Minister should now have the courage to call an early general election. So no delay Brown, go to the Palace now!!!!
- Arthur Lincoln, Roeselare, Belgium
None of them know what to do. Printing money is yet another step to bankruptcy.They are running around like headless chickens.
Cut all civil servants pay by half & their pensions.
Sack at least half of them. Who needs Dustbin spies etc. (It is not British)
Cut MPs salaries by half,so they set an example. Make Local & County Councillors work without payment. It should be an honour to represent their fellow citizens. (My wife was not paid any thing when she was on the R.D.C.)
Get out of the EU now. It should be only there for free trade not for making stupid & expensive rules
Admit Global warming is a con trick. What is wrong with a good bonfire for most waste?? Rather satisfying in my opinion.
Cancel all credit cards and make them into debit cards which have to be paid off at the end of the month.
Make all professional footballers & T.V presenters pay tax @90%.
Bring all troops home from Iraq & Afghanistan,(the latter will never be settled.)
If some one is in negative equity.Let him compound himself with his creditors but stay in residence. The mortgage people should have sussed out whether he was up to scratch & so it's their fault if he is not.
Scrap the TV & Vehicle licensing authorities. The T.V license can be collected with the Community charge. Vehicle license can be added to the price of petrol/diesel. (This is done in France).
I could go on!!
- Mordwinoff, Lisle France
Surely the headline should read "Alistair states the bleedin' obvious again", unless your head has been in a bucket for the last month you'll know that the redundancies have only just started, of course there's worse to come.
- Bob, Cheam
If i came out with a atatement like that at work i would be shown the door. Talk about stating the b****ing obvious.
- Gordie, Manchester, UK
The Head of Opec, leaders of Germany, Norway, Sweden, OECD, Economic pundits of all the major international financial journals have all stated what a mess the British Economy is in - The reckless borrowing, out of control public spending, over taxation and regulation have all been the cause - They all forcast the recession, it's depth, the fact that Britiain will be the worst affected major economy as it has been the least prepared and worst run- It is Britain and the welfare of it's people that should be the priority not a politicial party or an individual politicians career interests- In America no one knows who Gordon Brown is but they do talk about the mess of the British economy. The truth is Gordon Brown doesn't know what he"s doing and the sad thing is that a whole country has to suffer for it? How has this been allowed to happen? The fact As he stated in his last budget as chancellor in 2007 that he had ended boom and bust therefore he made no preparations for their ever being a down turn in the eonconomy!!! Shocking! He actually believed he had the moral authority to tax people and regulate as he liked and resdistribute as he saw fit. The spectre of a massive recession, mass un-employment, those policies, of over regulation & taxation has put paid to that but will be the noose round the neck of any recovery - This man's day of reckoning must come soon but the damage he has done will last an awful lot longer. God help us all.
- David James, Florida USA
Recently some top bankers have apologised for their incompetence. Even though I still regard them as pondlife, I despise them less than I did. I would feel the same if Brown apologised for his mistakes of which there have been too many. He will not as he believes that the blame lies elsewhere like the bankers who have not apologised. Denial is a powerful emotion.
- Alex C, London
Unfortunately both of the disasters (Darling and Brown) can do a lot more damage before they are found out and kicked out. It's sad how large amounts of people are still taken in by them and think they will fix the problem-which Brown went a long way to cause in the first place. Naturally they blame everyone but themselves for the mess-Brown says America caused it all!
- Jon Kent, Hertford. UK
The Scots seem to have a penchant for fools at the top and the English seem to have a penchant for Scottish fools at the top - even unelected ones.
Consider that one year ago Royal Bank of Scotland paid US$100 billion for ABN Amro. That seemingly impossible amount would now buy:
Citibank $22,5 billion (74% down)
Morgan Stanley $10,5 billion (-72%)
Goldman Sachs $21 billion (-67%)
Merril Lynch $12,3 billion (-77%)
Deutsche Bank $13 billion (-71%)
Barclays $12,7 billion (-71%)
And still leave $8 billion change - with which you would be able to pick up General Motors, Ford, Chrysler and the Honda F1 team.
- James, London UK
When EXACTLY is Alistair Darling going to finally legally force the Banks & Building Societies into reimbursing their "Ripped-Off" customers for their systematic, unnecessary, greedy "over-charging" over the last 10 years? Or is the Chancellor going to let them off Scot-Free? When EXACTLY is Alistair Darling going to "immediately underwrite the automatic repayment" of ALL of these outrageous "overcharges", with FULL repayments being made automatically within 30 days? After all, the "fat-cat bankers and directors" have ALL received their vulgar excessive salaries, bonuses & profit shares for years on the back of these unscrupulous practices. Shouldn't these bankers be forced to "pay back" their illicit gains or face time in prison?
NOW is the time to act before any more of these banks go bust or are taken over by the state. The government MUST now GUARANTEE the bank's records in respect of ALL of their greedy over-charging will NOT simply mysteriously disappear! After all, could the Government and/or its Regulators who did NOTHING about the totally unnecessary, greedy "over-charging" NOW be deemed to have been "contributory negligent" and/or "vicariously liable" for permitting these practises to both occur and to continually recur over the decade timeline?
- Fraser, Telford Park
Wreckers anonymous. Just one of these days I would like to see Brown or Darling being interviewed by someone other than a Labour sycophant. Or even better, meet the real public, not the pre-selected Labour minions strategically placed.
- Roger, Surrey
I predict a recovery about 2 seconds after Brown and Darling get their gilt-lined P45s.
- Nobby Clark, Perth, Scotland
Darling hasn't a clue, and neither does the puppet master, Brown. We're doomed...
- Ian, London
Bye bye Darling.
- Dave Davies, Basingstoke
Yet again, these poor excuses for a Prime Minister and Chancellor have been proven wrong and wrong again. They are applying the stealth cosmetics employed by Brown during the sunshine years, when rising stock and house prices masked Brown's deceit and obfuscation. Now the rain is pouring in, because he did'nt fix the roof when the sun was shining, ransacked people's savings, Brown is now exposed as nothing more than the UK's version of Mr. Madoff (pronounced made-off), in the USA, running a Ponzi scheme that is about to finally wreck the UK economy. The falling pound is the signal that overseas investors are selling out because they have no confidence in Brown's management and his many chickens are now coming home to roost.
The electorate have finally rumbled Brown and for the good of the country, go Brown and go now.
- Bingham Macnamara, lymington, uk
'Far from through this recession'?! - he must have had drop too much rum punch: it's barely started.
- Roz, Chamonix, France
But we are through with you, boom & bust Brown and this dreadful communist-influenced Labour Government.
Labour 1997-2009; A period of wasted opportunity under undoubtedly the worst Government in British history.
- Joe, Thornton Heath, UK
You don't say!
It takes an experienced Chancellor to deduce that.
- Steve, London
