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As if producing the most dismal Budget in memory wasn't bad enough, we've now had this. Two days after he “commended” his speech to the House of Commons, the Chancellor's forecasts are shown to be false.
Ordinarily, in the world removed from economic predictions, a fall of 0.3 per cent may appear trivial. But this is desperately concerning. The drop in output for the first three months of the year of 1.9 per cent versus 1.6 per cent in the final three months of last year means economists are predicting a contraction for the economy this year of four to 4.5 per cent, not the 3.5 per cent Alistair Darling claimed. Each full percentage point roughly equates to another £10 billion in borrowing. Suddenly and unbelievably, a record debt of £175 billion appears to be hurtling towards £185 billion. What was bleak has now got even bleaker.
There is more to this, though, than mere figures. On Wednesday Darling said the economy declined “by a similar amount” in the first quarter of this year as it did in the last quarter of 2008. That was taken to mean about the same. In economy terms, a fall of 0.3 per cent is nothing like flat. It's the largest quarterly drop since the third quarter of 1979. And, to put it another way, he was virtually 20 per cent out (he indicated minus 1.6 per cent, when the truth was minus 1.9 per cent). This too, from someone who wants us to believe in his ability to manage the economy and in a year's time will ask us to give him and his colleagues our vote.
What this shows is deception or negligence on a frightening scale. When he delivered his Budget, Darling must have known and if he didn't know he ought to have done, that what he was saying was wrong.
Officially, he isn't informed of the figures until 24 hours before they're released. That means Darling and Gordon Brown knew when they were insisting yesterday on talking up Wednesday's Budget. But the Treasury has the same data that produces the official numbers. Surely its own legion of bright young things could and should have come up with same result?
If past form is a guide, Darling and Brown might be minded to hold an inquiry into how they got things so terribly wrong — it will be the system's fault, you'll see, not theirs. The City, though, is not easily fooled. The Chancellor is losing credibility at about the same rate he is forced to revise his estimates. And this, at a time he wants investors to believe in him sufficiently to buy £240 billion of government bonds. It would be funny if it wasn't so serious.
Reader views (1)
On the data we've seen so far, there doesn't appear to be a hope in hell of the UK turning the corner this year. Alistair Darling was handed a slippery ball by that most slippery of characters, Gordon Brown. Labour's moment of truth will come in June '09 when the local and MEP elections will finally see off Brown and in the general elections when the electorate will finally see off Labour..
- Wayne, Dubai, UAE, 29/04/2009 13:12
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