George Osborne targets Labour's "endless announcements" as fears grow of recession worse than the 1980s

Shadow Chancellor George Osborne has issued this statement:

“With unemployment rising faster than anywhere else, and businesses closing every day, these figures are deeply worrying. The government's endless announcements and summits are commanding neither public confidence at home nor confidence abroad. And it's difficult to see how we'll get that confidence with a Prime Minister who blames everyone else for the mess we're in and refuses to acknowledge any mistakes. We need urgent action to get credit flowing again and to help the innocent victims of the recession. Britain’s families and businesses need a government that will get the public finances under control, set out clear and sensible plans for the future, and restore confidence so our economy can recover.”

PoliticsHome has captured David Cameron's response to today's news.

Interviewed earlier on BBC News 24, CentreRight's Andrew Lilico (who had accurately predicted a 1.5% contraction on this morning's Today programme) warned that the total peak-to-trough loss of GDP would be 6-7%.  That would be worse than the 1980s when national income dropped by nearly 6%.  9% is not implausible, according to Andrew, if there is no material positive effect from lower interest rates and fiscal loosening.  We could even get a double digit recession, he warns, if the worst case scenarios of significant deflation or sovereign default occured.

Tim Montgomerie

Comments

[James Burdett]

George Osborne was very good on Sky shortly after the figures were announced. The presenter tried the 'do-nothing' charge but was batted away imperiously. The interview was absolutely spot on.

[Elaina Brier]

"George Osborne targets Labour's "endless announcements" as fears grow of recession worse than the 1980s"

Who was in power in the 1980s???

I've concluded they are all the same!

[Steve Tierney]

With respect, Elaina at 12:58, the trouble in the Eighties were a Conservative government forced to take unpleasant and unpopular measures to repair the horrific mess left by Labour.

That is not 'the same' as our present situation, where Labour inherited an excellent economy, gave it a good kicking for a decade or more, then tried the "don't blame me 'guv" approach when the economy finally gave up the ghost.

If you've concluded "they are all the same" then I suggest you look a bit more closely at the facts. Cynicism, while a useful tool, is pointless when misplaced.

[michael m]

Although GO was on Sky- no sign of him on World at one, where Clegg had more a go at the Conservatives 30 years ago then Brown now.
All very well for "statements"- GO and the entire team should be on every media possible !
I notice the BBC at least now refers to the "recession"

[pp]

Osborne has it 100% right.

Until brown stops flapping around, noone else can do anything.

The economy will not be saved by the government, it will be rebuilt by individual people, the work they do and the companies they run.

But they can't start doing that until we have a government that can delvier a stable environment to build on.

The government need to do less - not more.

[Malcolm Dunn]

I know George is right in what he says but I do wonder at his constant 'politicking'. I think everyone knows how much we blame Brown for the current situation, wouldn't media appearances be better used to illustrate our alternatives?

[The Bishop Swine]

Worse than the 80's, Yes I have that feeling as well. What’s more I think the people are wise to many of games the political class may want to play. With 1 in 10 unemployed, deflation is absolutely on the cards. I don’t think we will see house prices at 30’s levels just yet. Japan managed “just” to avoid deflation and mass economic collapse but it cost them for the whole of the next upswing. We are going to have little choice but to hope with the other economies that the very first world recession isn’t its last.
Frankly the pressure from the “people” will be protectionist, we will have to appease a growing body of furious folk. If welfare reform equals inflicting poverty level incomes then we are indeed going to have the potential for civil unrest. How hard are we willing to bite the hand that feeds us? Bankers getting billions is just not going to wash with Joe and Fred when they realise that they are supposed to manage on JSA.
If we hope to kick start the market then its exactly these people who should be getting the bail out not the crooks who got us into this mess. I think there will shortly be a call for an accounting, lets see if we can “balance” the books. Mighty Rome recognised the right of the mass to be watered, fed and entertained. It simply will not do for millionaires to lecture , when we need good quality working class economics. People have a right to a share or allotment in the One Nation, they have a right to clean water and bread. Lets ditch human rights in favour of humane rights. The ever increasing Bills have to be added to the Welfare right or there will be a call for those industries to be brought back into the public fold. Red-Tories, now there is a thought to put the willies up the old guard. Of course if we choose to arm ourselves, we could generate all of the needed employment to a man. Brown has lost the respect of the working man, who is after all the bed rock of this Great Britain. We need to generate a rosy vision of a family centred as of old around the fireplace. Maybe we should lay off stoking the recession a bit (maybe George is making a packet out of his little games) but its not "good" for Britain. Of course there is a great opportunity for anyone with a few bob if they are willing to tie up right now. The depth of this recession will be exactly proportionate to the greed of the Bears.

[The Bishop Swine]

Worse than the 80's, Yes I have that feeling as well. What’s more I think the people are wise to many of games the political class may want to play. With 1 in 10 unemployed, deflation is absolutely on the cards. I don’t think we will see house prices at 30’s levels just yet. Japan managed “just” to avoid deflation and mass economic collapse but it cost them for the whole of the next upswing. We are going to have little choice but to hope with the other economies that the very first world recession isn’t its last.
Frankly the pressure from the “people” will be protectionist, we will have to appease a growing body of furious folk. If welfare reform equals inflicting poverty level incomes then we are indeed going to have the potential for civil unrest. How hard are we willing to bite the hand that feeds us? Bankers getting billions is just not going to wash with Joe and Fred when they realise that they are supposed to manage on JSA.
If we hope to kick start the market then its exactly these people who should be getting the bail out not the crooks who got us into this mess. I think there will shortly be a call for an accounting, lets see if we can “balance” the books. Mighty Rome recognised the right of the mass to be watered, fed and entertained. It simply will not do for millionaires to lecture , when we need good quality working class economics. People have a right to a share or allotment in the One Nation, they have a right to clean water and bread. Lets ditch human rights in favour of humane rights. The ever increasing Bills have to be added to the Welfare right or there will be a call for those industries to be brought back into the public fold. Red-Tories, now there is a thought to put the willies up the old guard. Of course if we choose to arm ourselves, we could generate all of the needed employment to a man. Brown has lost the respect of the working man, who is after all the bed rock of this Great Britain. We need to generate a rosy vision of a family centred as of old around the fireplace. Maybe we should lay off stoking the recession a bit (maybe George is making a packet out of his little games) but its not "good" for Britain. Of course there is a great opportunity for anyone with a few bob if they are willing to tie up right now. The depth of this recession will be exactly proportionate to the greed of the Bears.

[rugfish]

Market Oracle says...

http://www.marketoracle.co.uk/Article7084.html

Keynesian-style government spending programs are also being promoted by election candidates and in the media. We should not forget that, while governments are reasonably efficient at extracting money from taxpayers, they are highly inefficient when it comes to spending that money. Recently, an economist discussing stimulus packages suggested that about 30 percent of money spent by governments is wasted. I am sure many of you would agree: that estimate seems way too low.

Paying someone to sit at a desk doing nothing or building a bridge to nowhere may make GDP figures look better, but there is no real benefit to the economy. I can already hear the snorts of derision: "What about the benefit generated when those extra wages are spent?" This misguided thinking is evident in many government programs. There is no benefit. All that is done is remove money from the pocket of one person (the taxpayer) and placed it in the hands of another. Henry Hazlitt offered the analogy of smashing shop windows. This no doubt generates more employment and income for glaziers. But shopkeepers have to bear the additional expense — and are likely to pass this on to their customers. Shopkeepers and their customers are therefore deprived of the opportunity of spending that money for their own benefit.

The more public-spirited amongst us may be prepared to forego that additional benefit in order to employ more glaziers, but there is an additional consideration. We have now reduced the surplus (of income over consumption) that is normally used to save and invest. That means that there will be less investment in plant and machinery and new retail facilities; less employment generated in manufacturing these assets; and less employment in operating them. While we have created a new job for one glazier, we have done so at the expense of two or more manufacturing jobs. And exchanged productive plant and machinery for a broken shop window — or a bridge to nowhere.

[resident leftie]

1985 - inflation 6.1% - higher than our competitors.
unemployment 3.5 million, mainly manufacturing jobs.
The pound, $1.05
The coal industry - destroyed.

This slump was unique to the UK, and Thatcherism. The Opposition was divided.

[Bill Brinsmead]

Andrew Lilico correctly, in my view, highlighted the structural changes the British economy must undergo in this recession - the financial sector will shrink as a proportion of GDP and employment, and house prices have to fall.

He didn't mention the car industry which will also have to restructure. Too many cars were already being produced in Europe during the debt led boom, now that credit has to shrink as part of financial re structuring the car industry will be doubly affected.

Mitigating the recession to the point that necessary structural changes are deferred will only serve to prolong its impact on growth and employment - but I guess this the government knows this hence the indulgence in crocodile tears and pointless action.

[TomTom]

Malcolm Dunn expresses it well. Osborne has a fetish about Brown and should simply recognise Brown is a busted flush. In a matter of weeks Boy George could be Chancellor (heaven help us all !) and expected to deal with the situation masterfully and quickly so the markets do not take fright.

I have yet to see or hear Osborne acting like he can take charge and restore confidence so he should stop being the schoolboy and start acting as if he can do the job Cameron has - unwisely in my view - allocated to him in a future government.

Brown can fall on his sword at any time but Osborne still has to prove he can do the job

[Richard]

Osborne,should be focused on getting Labour to open up the books,i don't think i am the only one thinking,its in the countrys interest to have what the polls are saying will be the next Government of the UK,have access to the financial figures to plan their plan of action,i think it is a no-brainer,are they to have the disadvtage of wating until day 1,then waiting weeks why they study the books,we need Clarke & Osborne to have access now.

[Richard]

It is a disgrace to Democracy,i think it could be unique in the Western World,where the Government only have access to the books.

It is believed that Labour have hidden about £150bn of PFI off the books,Cameron needs to make a issue of this,we need the opposition to be able to have a financial plan,in the event they are elected a plan that has been worked out in advance,they need to see the books.

[Richard]

I think this is such a big issue,if Brown were to refuse,Cameron should take legal action,to make them hand them over,ithink the voter's of all persuasians would back Cameron on this.

[resident leftie]

Posted by: Richard | January 23, 2009 at 19:38

It is believed that Labour have hidden about £150bn of PFI off the books,Cameron needs to make a issue of this,we need the opposition to be able to have a financial plan,in the event they are elected a plan that has been worked out in advance,they need to see the books.

Eurostat GDP figures include PFI. They compare favourably with other countries at the last reported figure.

Here's the UK's debt figures as a % of GDP:

1996 51.3% (Last year of Tory government)
1997 49.8%
1998 46.7%
1999 43.7%
2000 41.0%
2001 37.7%
2002 37.5%
2003 38.7%
2004 40.4%
2005 42.1%
2006 43.1%
2007 43.8%

[pp]

The conservatives have one massive problem.

The job of the opposition is to make the government look bad - but when the government are making themselves look as bad as can be, what is left for the opposition to focus on??

Conservative supporters are flapping a bit because the government are doing the oppositions job for them...

Osborne is doing a great job - he has fantastic resources to call upon - I would challenge interviewers assertions more, but I am happy to trust his judgement. Go George Go!

[snegchui]

Resident Leftie:
Go add in the PPP which are "off-balance sheet" and come back again,

[resident leftie]

Posted by: snegchui | January 23, 2009 at 23:11
Go add in the PPP which are "off-balance sheet" and come back again,

The Eurostat figures are compiled in accordance with code ESA95, and includes all PPP debt as part of consolidated government debt.

[Jono]

@resident leftie

No one believes government sponsored figures any more. That you still do reveals you as nothing more than another meaningless servant of this regime. They won't thank you for your dumb loyalty.

And your "Eurostat" source, one of many left-leaning, Euro-"sources", got their figures from, you guessed it, the UK government. And that's what honest people call a "bullshit loop".

Whatever pro-European, left wing pressure groups might be saying to each other, the FACT is that the ECB expects the recession in Britain to be far worse than in the rest of the Eurozone. Why? Because Brown's Britain is in debt up to its blind eyeballs. And he knows that. That's why they HATE him and his mindless lectures on how to create permanent booms.

He's a laughing stock - and we're a laughing stock (more to the point) because someone in this country allowed this moron to take over. Without an election!! No one abroad understands that. I'm not sure I do. I'm tempted to think we've been taken over by some dickhead dictator by some accident of history. Would be the first time, but it's not impossible. And the bastard's not been elected, has he?

Anyway, the true figures of British debt be hidden by its government, but the market knows that Britain is almost bankrupt.

Explain that.

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[TomTom]

On 20 September 2006, the public sector finances First Release
1
included for the
first time estimates of imputed finance lease liabilities. The majority of these are
associated with those Private Finance Initiative (PFI) projects judged as being on
the public sector balance sheet (not all contracts under PFI projects involve finance
leases). The new estimates are the result of a long period of work dating back to
2001 and have been calculated consistent with international guidance, based on the
financial statements produced by the public sector, which are subject to audit.
The estimate of the total public sector imputed finance lease liability at the end
of March 2005 (the last financial year for which most data are available) is £4.92
billion. This revises public sector net debt (PSND) up from £419.6 billion to £424.5
billion for that period, an increase equivalent to 0.4 per cent of GDP. The estimate of
imputed finance lease liability at the end of March 2006 is £4.95 billion.

So it does NOT include PFI where the contracts are structured NOT to look like a Capital Lease which is how the Government has kept them "off-sheet" just as the public sector pensions being unfunded are not included

[The Bishop swine]

At least Mark Harper is gathering the right information to get his department up and running on day one.

[The Bishop swine]

"just as the public sector pensions being unfunded are not included" Lets also not forget the ever increasing pensions Bill liability that this government has built up, with a vast bulk of people likely to be dependant on the state provision thanks to Brown's theft of funds and his disastrous effect on future pension provision. We are facing bigger bills and are indebted. Many 50 something’s look forward only to a chance to burn out on a park bench., thanks in no small part to Comrade Browns pinko weakness.

[The Bishop swine]

"Osborne,should be focused on getting Labour to open up the books,i don't think i am the only one thinking,its in the countrys interest to have what the polls are saying will be the next Government of the UK,have access to the financial figures" Agreed and with some passion. I would also like a very deatailed look at the bank accounts of every Labour MP or "Lord", lets be clear its a matter of real public intrest. If they have nothing to hide they will be more than willing to help.

[CJT]

To get back to the original theme of this stream, George Osborne's critique of the Labour government is fine. But what is he proposing to DO that's different? His Sunday Telegraph article promises such exciting fare as 'growing public spending more slowly'. This is about as convincing as 'sharing the proceeds of growth'.
Come on, George, this just won't do!It's not good politics, nor is it what the economy needs.
We don't really know what monsters are lurking in the bank vaults. We need them to come clean. And the growth in Labour's client state has to be stopped and reversed before it bleeds the country to death.