The Economy Today

Alistair Darling’s pre budget report ( essentially an emergency budget ) gambles that the recession will be all but over by the end of next year, with economic growth returning to positive territory by the third quarter.

I’m not so sure. My predictions have always been that recovery is unlikely until around May 2010, but what do I know? Well, all but one of my predictions over the last year have proven to be correct, which is more than can be said for any of the so called experts.

The chancellor’s bet depends on three risky gambles.
First, the British economy will recover as early as the second half of next year.
Second, the government can deliver a major clampdown on spending with huge efficiency savings.
Third, the electorate will support a significant rise in taxes targeted at the wealthy but which will probably hit those on middle incomes too.

If he is correct, then he will be hailed a hero, Labour will be re-elected and the economy will quickly recover. If he is wrong, the UK will be left with a hangover from this recession for decades - possibly having to call the IMF for help.