On the one hand, you have U.K. Chancellor of the Exchequer, Alistair Darling’s bold declaration that Britain will get a leg up on the economy again by the end of this year.
On the other hand, the International Monetary Fund (IMF) says that not only will the global economy decline by 1.3% this year, but the UK in particular will suffer a 4.1% loss in 2009 alone, with another 0.4% drop in 2010.
And according to the IMF, that’s no offense to Britain either, since the organization expects Italy to take a 4.4% drubbing, Germany to fall 5.6% and Japan a whopping 6.2%. France won’t do quite as bad, with a 3.0% economic drop. And the U.S. will only tank 2.8% if the IMF correctly predicted the global forecast correctly.
(Hey, it might not be the greatest economic data we’ve ever heard, but it certainly could be worse, right? Let’s look on the bright side!)
The doom and gloom forecast, it attributes, can still fall squarely on banks and mortgage firms, which it claims, are only a third of the way through writing down their losses in toxic debts. And since the UK has a particularly obese financial sector, it’s got enough health problems in store to keep officials as busy as surgeons performing quadruple bypass surgery.
In other words: It’s going to take a while.
Darling just doesn’t see it that way though. While he has predicted the UK economy contracting by 3.5% for the year over, he believes it will recover by 1.25% in 2010, probably due to his personal faith in government plans to borrow a further £269 billion ($392 billion) than it already has to shore up the ailing economy.
But some of his fellow Brits, such as Ross Walker, a Royal Bank of Scotland Group Plc. economist, side much more strongly with the IMF’s dire outlook. Darling’s perspective is “a very, very optimistic set of growth forecasts,” Walker commented. “It seems that we have the worst of all worlds: huge tax increases alongside rather vague efficiency savings alongside optimistic growth predictions and scant evidence of any serious control of public spending.”
