Gloomy new year

What is it about leaders that make them so pessimistic? Here’s the new year and all that’s heard is, how bad things are going to be.

It started yesterday, with the Prime Minister telling the country that if you thought it was bad last year, you ain’t seen anything yet. 

Well, he didn’t quite put it in those terms. What he said was that the British economy faces another tough – and possibly worse – year as he admits that Britain may only win a temporary respite from the crisis in the eurozone.

And he’s not alone. Both Angela Merkel and Nicolas Sarkozy also warn of a bleak year ahead. 

So there it is, the leaders of the three largest European economies putting their collective heads firmly in their hands and moaning that things are bad and likely to get worse.

The warning by the prime minister contrasts with a bold statement in his new year message last year in which he stated: "We have pulled Britain out of that danger zone."

So this years message is an admission that he failed and last year’s message was simply prime ministerial bullshit.

The worry of many European leaders is that their respective countries are heading towards that much talked about double-dip recession. 

Whilst Britain can hold its political nose about all things European it cannot escape from its heavy dependence on the performance of the European economies. Whether Cameron and the backwoodsmen in his party like it or not, if Europe sinks, Britain goes under too.

It has finally dawned on the prime minister that his blind adherence to an austere monetary policy has not worked. It's taken him 18 months for his eureka moment that to succeed, you need a plan for growth. 

The proposals for more investment in infrastructure schemes is a late recognition by the government that it needed to change tack. 

As Cameron said, yesterday, "I know much needs to change. We've got to do more too to bring our economy back to health. So we've set out big plans for the transformation of our infrastructure, starting now – with better roads and railways, super fast broadband and new homes."

Too right, Prime Minister. This blog has been urging such a change throughout 2011.

The policy of austerity that seems the only game in town in dealing with the European crisis is the wrong response. It will lead only to unbearably hardships and civil unrest. 

So the message is simple. The only way out of the mess is to stimulate demand and get the economies of Europe to grow again. 

So let politicians shake off their gloomy mood. And in the words of Morecambe and Wise “Bring  us sunshine.” They have the tools to grow economies. If only they take off their monetary blinkers  and start investing in the real economy again.