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Clarke: Britain is on the brink of 'meltdown'


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Ken Clarke warns Britain is on the brink of 'meltdown'

Kenneth Clarke, the former Conservative Chancellor, has warned the economy is on the brink of "meltdown" and unemployment could reach three million.

By Rupert Neate and Robert Miller

Last Updated: 3:44PM GMT 12 Nov 200

Mr Clarke, 68, said the British economy is headed for a "catastrophic crisis" that will be "far worse than anything that has occurred in my lifetime".

"There will be a very serious recession next year," he said in an interview with Telegraph TV. "I think the big problem in 2009 will be the catastrophic fall in consumer spending demand, spending in shops will get worse."

Mr Clarke, who as Chancellor of the Exchequer between 1993 and 1997 led Britain's recovery from Black Wednesday, called for a temporary cut in VAT to boost spending.

Speaking as the Office of National Statistics revealed unemployment has reached an 11-year high of 1.82m, Mr Clarke said the number of jobless could soon reach three million.

"It is going to go up a long way... whether we will get back to three million again is one of those slightly morbid questions I really don't know the answer to. But it could get pretty big," he said. Rising unemployment will have a "devastating effect" on families and lead to more people being unable to pay their mortgages, he said.

The former Chancellor said Gordon Brown has received undue credit for his role in attempting to shore up the global economy. "The idea that Gordon has saved the world is not true," he said. "We still have a major, major crisis in this country and... public finances are in a terrible mess".

Mr Clarke said the larger than expected 1.5 percentage point cut in the base rate was a good move, but cautioned that it would not end the crisis. "We had a big cut in interest rates, about which there was a wholly exaggerated expectation, in the short term it will have modest effects, if any. Long-term it will begin to have effects.

"We are not yet in a state where we can be absolutely certain we are not going to have something close to meltdown next year", he said. "You do have to see what can be done with taxes."

He cautioned that Britain has "mounting debt, which is unsustainable" but said policymakers should bear in mind the effect a "full-blown depression will have on public finances". Looking forward to the Pre-Budget Report he said any fiscal stimulus package would have to work in both the national interest and contribute to worldwide efforts to stabilise the global economy.

Mr Clarke said the public can see the Prime Minister has got more "confident" in his economic judgement, but said he imagines the Treasury is being "driven crazy by the wild way" in which he and his advisers spark speculation about the way the Government intends to combat the financial crisis.

According to Mr Clarke, public respect for banks, which are "hated institutions" at the best of times, has collapsed. He was also "very concerned" that the Government could make the crisis worse by forcing banks into "lending that they cannot afford".

Full story, source: The Telegraph

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This is a Labour government for you.

Remember Northern Rock because this is were it all started. Gordon Brown true to form dithered over how to best deal with the bank. while he was dithering investors like rats on a sinking ship, jumped off HMS Great Britain taking their money with them.

The pound is falling faster than a sack of spuds. they ****ed manufacturing up and continued to do so leaving our manufacturing industry dead in the water. so a low pound isn't going to help us.

So if the **** hits the fan we'll have to sell gold. Talking of Gold when Gordon Brown sold our gold, this is what he sold. i wrote to my MP who passed my request on to a Lord. between 1999 and 2001 Gordon Brown sold 400 tonnes of Gold and with the money he bought Dollars, Yen and Euros in this financial crisis we have ended up 6 BILLION worse off.

Yet only last week Gordon's poll ratings went up. people must be crackers. The man has made this financial crisis worse because he was borrowing like crazy instead of saving and left us floating on a sea of debt.

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I'm of the opinion that it's fat ****s like Kenneth Clarke and the like spouting off about Britain being "on the verge of meltdown" that's making the situation worse. If the media shut the hell up things might have a chance to recover, and I for one am sick to death of hearing about it everywhere I go. And yes, Brown is a useless, one-eyed sack of custard with as much economical nouse as your average Big Brother contestant. Shamefully, I didn't vote in the last election because I didn't see the difference between Howard's insipid Tory party and Blair's limp Labour. I will be voting in the next one, and it bloody well won't be for Gordon "Prudence" Brown. Can't Understand New Technology.

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