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THE fall in the value of shares today - the FTSE fell below 4000 - like the recession itself cannot entirely be blamed on Britain alone: part of it was attributable to events in America. And given the gloom about the banking sector, a fall in financial equities is hardly surprising. But there are grave doubts about the British economy, especially after the latest revelations about the extent of public debt. Certainly, the market may not have fallen as it did had it not been for the downturn on Wall Street, a fall that was partly to do with doubts about the Obama economic rescue package. But there are enough home-grown reasons for gloom.
There will always be a rise in public-sector debt in a recession: when people are out of work and businesses go under, tax receipts fall; correspondingly, social spending on unemployment and other benefits goes up. And duly, that has happened: the Office for National Statistics (ONS) says that in the 2008-9 year to date, tax receipts are down by £10 billion on a year ago. The liabilities from the wholly or partly nationalised banks are what has led the ONS to predict that public debt will reach £1,200 billion in three years.
It is not just the scale of debt that leads investors and pundits to be concerned about the future. There is a broader loss of confidence in the direction of the Government. As the CBI puts it, the welter of recent ministerial initiatives does not amount to a coherent strategy. The Unite union, Britain's biggest, has said it fears manufacturing may not recover from the downturn. And if that were not enough, last night Sir John Gieve, the deputy governor of the Bank of England, gave a valedictory speech criticising the tripartite division of powers between the Treasury, the Bank and the FSA which was the cornerstone of Gordon Brown's policies.
All of which adds up to very good reasons why the markets are worried. Mr Brown will have his work cut out to rectify that.
Too many tests
An inquiry into primary schools in England has delivered a damning verdict on the way they function. Researchers from the Cambridge Primary Review suggest that the curriculum is far too narrow, with subjects such as history and science squeezed out by an over-emphasis on literacy and numeracy. The researchers are particularly critical of the influence of testing on children, saying teaching is skewed towards subjects which are tested.
The Government has given short shrift to the report and in one respect ministers are right to do so. There is a very good reason for the emphasis on literacy and numeracy in the curriculum and that is the fact that so many children proceed to secondary education without these basic, necessary skills. Without literacy and numeracy, teaching other subjects like history and science is far more difficult.
But granted that the Government is right to stand by its emphasis on the three Rs, the case against over-testing is far stronger. It does impoverish a child's education if schools' emphasis is on "teaching to the test" in order to bolster their Sats results and their place in the league tables. Less testing could mean greater breadth in the curriculum.
There will be a further challenge to the Government's priorities in education when its own inquiry, led by Sir Jim Rose, reports later this year. If that report, like the Cambridge review and many teachers, says pupils are tested too much, the Government would be right to think again.
Time to rebel
There is a lively campaign among student groups at London University to disrupt the Miss University London finals in March. Protests are a traditional part of student life, the more impassioned the better. Just as well to do it now: the participants may find that in later life, they don't have the time.
Reader views (1)
At last someone is asking questions about the correct policy response. The lesson of the 30's is not that the solution is more massive Debt. There was little to start with then. The average person is rightly suspicious of the "hair of the dog" approach which at best can only delay a return to balanced income and associated demand and at worst obviously makes it worse. This is a financial bubble!
- R Jones, Bristol UK, 20/02/2009 17:12
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