Some Light Reading for Brown and Darling
When Brown and Darling are preparng their budget, they should pay heed to this document and note well what it says. Some choice advice and quotes for them to ponder. For the rest of us read it and weep at the state these utter f*ckwits have manged to get our country into.
First a quick review of what it said last year:
In its opinion of 10 March 2009, the Council summarised its assessment of the previous update of the convergence programme, covering the period 2008/09-2013/14, as follows. The Council considers “that the programme confirms a rapid deterioration in the United Kingdom’s budgetary position, which has strained the sustainability of UK public finances. The probably significantly weaker-than-envisaged macro-economic context in the near term carries the risk of a higher government deficit throughout the programme period.
Second a little tightening:
However, the rapid deterioration in public finances severely weakened the UK’s capacity to pursue a looser fiscal stance without compromising budgetary sustainability and calls for a rapid improvement in the budgetary position. In line with the exit strategy advocated by the Council, and with a view to correcting the excessive deficit by 2014/15 and returning to a sustainable public finance position, substantial fiscal tightening needs to be implemented from 2010/11 onwards.
Third a warning:
The update does not present a medium-term objective for the budgetary position that would bring public finances on a sustainable path. This is not in line with the requirements of the Stability and Growth Pact. The programme’s medium-term fiscal strategy is significantly less ambitious than recommended by the Council under Article 126(7) on 2 December 2009 and not in conformity with the recommendation to reduce the deficit to below 3% of GDP by 2014/15.
Fourth it could be worse:
The budgetary outcomes could turn out worse than projected in the programme over the whole period. The markedly favourable macroeconomic context envisaged in the programme carries risks for the fiscal projections in the programme.
Fifth another Warning:
The United Kingdom has also assumed substantial contingent liabilities as a result of its financial sector interventions. Under its Asset Protection Scheme, the government has agreed to insure banking sector assets amounting to almost 20% of GDP. While the extent to which the insured loans and investments are at risk of default is subject to high uncertainty, the scheme could result in a net cost for government, thereby reducing the pace of fiscal consolidation.
Sixth a However:
However, from 2011/12 onwards, the budgetary strategy is not consistent with the Council recommendations under Art. 126(7). In particular, even taken at face value the government deficit in 2014/15 – the deadline set in the December 2009 recommendation for the UK to correct its excessive deficit situation – is projected clearly above the 3% of GDP reference value (4.7% of GDP) and is furthermore subject to downside risks mentioned above.
Seventh a Footnote on our Unemployment Lies:
As regards the data requirements specified in the code of conduct for stability and convergence programmes, the programme has significant gaps in the provision of required and optional data.
To which the footnote is In particular, the lack of labour market data has significantly complicated the recalculation of output gaps according to the commonly agreed methodology.
Eighth a Conclusion:
The overall conclusion is that the fiscal strategy in the convergence programme is not sufficiently ambitious and needs to be significantly reinforced to be consistent with the Council recommendations under Article 126(7) TFEU of 2 December 2009. The combination of the operation of automatic stabilisers, falls in asset prices and the fiscal stimulus has provoked a major deterioration in UK public finances.
A joy to read this damning indictment of Brown and Economic Incompetence certainly isn’t. If Darling is forced by Brown to have a give-away Budget we will be on a course to Economic Madness.
2010-03-17_uk_recommendation_for_co_en.pdf (application/pdf Object).
strategy is not consistent with the Council recommendations under Art. 126(7). In
particular, even taken at face value the government deficit in 2014/15 – the deadline
set in the December 2009 recommendation for the UK to correct its excessive deficit
situation – is projected clearly above the 3% of GDP reference value (4.7% of GDP)
and is furthermore subject to downside risks mentioned above.