Wednesday, 8 August 2012
King downgrades, again
A trip round the Eisteddfod will confirm that the economy is sliding. Not a bank to be seen. It’s left to the Principality to wave the flag for the financial sector. Grant you, even it they were here, they’d be as welcomed as a rap artist would be in the Gorsedd of bards.
In past eisteddfodau every major bank would be here. As would be the large utilities. Few, if any this year.
Now it’s small niche businesses that predominate, political parties, voluntary organisations and of course all those Welsh bodies that tax payers in their generosity finance.
No, if the Eisteddfod is any indication, the economy ain’t doing well.
These impressions are now confirmed by no less an authority than Mervyn King the governor of the Bank of England. Even he’s now saying the bleeding obvious, that the economy is in the mire.
To put in official speak, the Bank of England has cut its growth forecast to zero from the 0.8% that was predicted in May. Some of us thought that 0.8% was wildly optimistic. How true. A year ago 2% growth was predicted for 2012. Now it’s no growth.
Little wonder. The double-dip recession intensifies.
So whats to be done? Speculation is rife that there will be a further interest rate cut. Unlikely immediately, perhaps later. Although what such a cut would do is difficult to imagine. The current rates are already so low, it is difficult to envisage that lowering them further will do much to get the economy growing again.
He said his recovery hopes had consistently been dashed. He can say that again. We’d be better off with Mystic Meg doing the forecasts than him. Each time he makes a prediction he’s had to downgrade it.
Unless there is a general change of direction in number eleven Mervyn’s hopes will continue to be frustrated.
it’s not all due to the euro-zone crisis. This is a made at home crisis. Unless someone starts spending soon, the economy will continue to be depressed. It’s as simple as that.
So what will the bank do. Their standard response is quantitative easing. The devise used to push more cash into the tills of the banks in the hope that they’ll lend it on. Will it work? Not much sign that its had a great affect to date.
So there we have it, despite Olympic golds there ain’t any golds being handed out for economic management.
A Chancellor to stubborn to stop digging when in a hole and a Governor of the Bank of England whose economic forecasts have the consistency of always having to be downgraded.
Without a change of tack and personnel we can only conclude in the immortal words of Private Fraser from Dad’s Army ‘We’re all doomed.”