Socialist Worker

Gordon Brown wants us to cheer up as the recession deepens

by Chris Bambery
Issue No. 2136

Gordon Brown warned this week against “pessimism” over the economy.

Meanwhile Richard Lambert, the head of the bosses’ CBI organisation said Britain is not in any danger of going bust and we should be careful not to “get swept away by the gloomsters”.

But for many working class people there is precious little to be cheerful about as unemployment rockets and Britain is officially classified as being in recession for the first time since 1991.

The European Commission predicts that the British economy will shrink by 2.8 percent this year, the worst performance in any year since accounts were first compiled after the Second World War.

The research group Centre for Cities has looked at the likely impact of the recession on different areas – with traditional unemployment black spots such as Belfast, Liverpool, Wigan and Hull likely to be the worst hit.

The group also warns that Bristol, London and Edinburgh are on the critical list because so many people in these cities are employed in the financial sector.

Not all economists share Brown and Lambert’s optimism. Jim Rogers, co‑founder with George Soros of the Quantum Fund, warned investors, “I would urge you to sell any sterling you might have. It’s finished. I hate to say it, but I would not put any money in Britain.”

British banks built up vast liabilities during the speculative boom of the past decade. This now threatens the entire economy.

The Royal Bank of Scotland (RBS) has liabilities of £1.8 trillion – three times annual British government spending.

RBS claims it has assets of £1.9 trillion to cover its liabilities. But since the onset of the financial crisis no one is sure whether that valuation is accurate.

The government is pledged to cover any shortfall because it guaranteed no British bank would fail.

Worried economists have warned that Britain cannot let its banks go bust as it would fuel an international panic and a financial meltdown.

Brown’s attempt to restore confidence in the banks through a massive injection of public money earlier this month has failed dramatically.

The government is now working on plans for further economic “stimulus” and looks set to postpone March’s budget accordingly.

Opinion polls last week showed that the much‑touted “Brown bounce” has collapsed – with the Tories now enjoying a 15 percent lead.

Labour ministers were quoted as saying this came as no surprise because they expected a “backlash” over growing job losses.


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