Sunday, 31 August 2008

How doomed are we, really?

As Alastair Darling does his best to emulate the doomladen tones of Frazer of Dad's Army fame with his statement that these economic times are the worst they have been for sixty years, Sean O'Grady offers a useful historical perspective in today's Independent on Sunday:

Even the most pessimistic independent forecasters don't see the economy in 2009 contracting by more than say 0.25 per cent. The worst years for growth since 1948 (when the economy shrank), were: 1991 (-1.5 per cent); 1980 and 1981 (-2.2 per cent and -1.3 per cent); and 1974 and 1975 (-1.7 per cent and -0.6 per cent). Few expect things to be quite as bad now: does Mr Darling? Current inflation, at 5 per cent or so, is not a patch on August 1975's record of 26.9 per cent. In terms of the financial system, the last time the banks were unable to provide credit to the wider economy on any scale was during the secondary banking crisis of 1973-74, a short-lived and minor affair, compared with our $1 trillion global meltdown. Then again, Mr Darling could be thinking of the Depression of 1930 to 1932, the last global credit crunch. Then the UK's economy declined by 15 per cent, many banks collapsed and the world was left with Hitler and the road to Armageddon.
But Darling was surely right to say:

We really have to make our minds up; are we ready to try and persuade this country to support us for another term?
I can think of better ways of going about it, myself.

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