Tuesday 30 June 2009

Alistair Darling to resign on 21st July

There are some assumptions behind the statement in the title. Some more likely than others:

- in the first place, revised GDP figures out today for Q1 2009 show the economy lost 2.4% of GDP in a single quarter. The worst performance since 1958. This is 20% worse than the first estimate released on 21st May 2009.

- As such, then next release by the ONS of GDP stats will be on 21st July or thereabouts for Q2. There is a general feeling that Q2 has not been as bad as Q1 by a long way. However, there has still been significant economic contraction.

- This means that any fall over 1.1% will mean GDP has already fallen by 3.5% this year. In the first two quarters. This is the fall predicted by Darling for the whole of 2009 - let alone just the start.

- So, IF Darling had any honour, he would resign, as the budget he has signed off on is quite clearly blow to pieces within 6 months and therefore the UK will need to quickly redress its spending position in line with the new lower GDP.

Will he do it though? I don't see the Government having a good record on falling on points of honour, or even dishonour. Instead perhaps they will come up with some more lies about how growth will magically appear in the second half of the year to balance out the falls in GDP.

This Government is well to course to bequeath to its successor the worst fiscal mess in the history of the Great Britain; although I have yet to see their plans for Danegeld (in the modern world, perhaps this is the IMF?)


ken from glos said...

Tw facts about labour that every generation of voters have to learn==

They always ruin the economy by spending too much.

They always leave office with more unemployed than when they started in office.

Simon Fawthrop said...

As there isn't going to be a spending review this year it doesn't matter. They'll just say that they will keep "investing" and thet the Tories will cut spending.

Part of me would like to see them win the election and then have to either explain massive cuts or why they've just handed over the keys to the cash box to the IMF for even bigger cuts.

With luck there would be riots and a few of the bastards torn limb form limb.

Only a very teeny weeny part that is, I'm not sure my pension savings could stand anymore hits without me having to think about imitating Boxer and working till I drop.

not an economist said...

I am sure there is a bun fight going on with Darling shouting at Brown that he is picking up the consequnces of Brown's stint as Chancellor. So I should imagine Darling is saying Brown should be the one to go - not him.

That said, based on his performance on tv over the last few days, Balls' seems to be on Happy Pills, spouting Mandelson-fed b@!!@cks on Sky News and the BBC whenever he gets a platform. I do wonder what has invigorated him so: maybe he knows he will get the CoE job sometime very soon ...?

Old BE said...

But CU, you are forgetting that growth starts tomorrow!

Anonymous said...

maybe he knows he will get the CoE job sometime very soon ...?

Why would that make him happy?
Here Ed, have a look at the books..


CityUnslicker said...

good comments all.

Anon - Balls would write new books from scratch; he appears mentally ill at the moment.

sobers said...

My reading of the situation is that AD is an honourable man, and wants to address the seriousness of our fiscal position now, before it reaches a critical mass of instability. He is prevented from doing so by the Brown/Balls/Mandelson triumvirate who can see nothing but ways of embarassing the Tories, and to hell with the nation.

So it is entirely possible AD would walk if the stats showed we were even deeper in debt than he suggested in April (which in itself was shocking) and he was prevented from taking any steps to retrieve the situation.

I feel we are rapidly reaching a point where what is going on is criminal negligence in government. To the point where the Tories may have to say they will pursue the current Cabinet legally unless they take action now.

James Higham said...

Where did I hear the economy has shrunk 2.4% this quarter?

Anonymous said...

He will if he's got any intelligence, but he's a former Trotskyist, so probably not.
I don't think we'll get to July 21st before the economy collapses.
I don't know if you are familiar with itulip.com. If not you should check out the recent posts.
When the economy collapsed in Argentina in 2001, the governments fiscal deficit was 3% of GDP, external debt was 55% of GDP. By comparison, next year in Britain the FD will be 14% the ED 90%. The markets won't let it get to that level, sterling is about to collapse. The trigger may be the S&P downgrade, but probably it will happen before then.
Get ready, we are about to go down the plug hole. The lynching of Brown, Darling and Balls can't be far away.

CityUnslicker said...

Anon - City sources suggest the downgrade won't happen this side of the election.

However, a currency event is definitely on the cards so i do agree with you. it all looks too late to do anything now

Old BE said...

Now, I know you don't give investment advice here at C@W, but what is a large mortgage, small savings kinda guy to do to mitigate the impending collapse?

Yokel said...

@ Blue Eyes:
My untutored guess says get an even bigger mortgage. After the initial pain, while the currency is still worth something, you will be paying the debt back with Monopoly money. And you might have something to show for the time.

@ sobers:
I fear it is even worse than you suggest. I fear Dan Hannan is right that Mandelslime's true objective is to get the UK yoked into the nation that is called Europe (adopting the Euro, and avoiding a referendum) by propping Brown up until after the Irish have been bullied into accepting the very same treaty that they rejected last time.

Rob said...

Could he do a Geoffrey Howe on us? Go on Darling, you know it's the right thing to do!

sobers said...

@yokel: I agree Mandelson's motives are probably pro-EU based, whereas Brown/Balls can only see as far as the hated Tories, and ways to do them down. But the effect of all three is to prevent Darling from taking any steps to prevent fiscal meltdown anytime soon.

We can only hope he does the honourably thing and resigns. That would really set the cat among the pigeons. I don't think even GB could withstand his Chancellor publically saying that economic policy was being run for political ends over the nation's interests. The markets would go into freefall, the pound would plummet, and bond yields go through the roof.

Not a sheep said...

"IF Darling had any honour" Do you see the problem?

Judy said...

From my neck of the scorched landscape that is Ireland, I get the feeling Brown is being behaving like that chap in the last downfall of the third Reich.