Monday, 18 January 2010

No Budget, Spoof Budget, or Call an Election Now

The bitter refusal to ask for a dissolution and have a general election is doing so much damage to an economy and a society floored by Brown's regime. Regardless of why the electorate is not being consulted on what it wants to do,  it is important to focus on the real terms of what  is caused by that obdurately denied consultation.

The Parliament expires at midnight on 10 May.  A Budget  must be prepared, presented, and voted upon before then. This year's budget is one of the most important in  more than half a century.

If we do not have a real budget what will happen?

There will be a 15 - 20% devaluation of the pound with respect to the euro.
A between 250 and 400  points increase in the price of credit default swaps on UK debt.
A significant down grade of UK credit rating by all agencies.
An even larger deficit (given the natural tendency of the tax base to shrink).
A resurgence of inflation.

All of which could lead to adverse further repercussions on employment and even more inflation.  Interest rates will have to rise and, in that way, pierce one or two current bubbles in house values and over-valued financial assets.

This time around we didn't get social strife.  But we have got gross levels of criminality and socially disturbed behaviour.  Next time?

By definition a Darling budget has a lifespan of between two weeks and two months.  A spoof budget with populist tendencies.  Its only virtue is  that it is there, rather than there being no budget; but it will buy time at a terrible price.  Should Labour still be in government, another budget will have to be produced in agreement with their coalition partners - they will not be in office alone.  Should the Conservatives come to power there will have to be a new budget.  There is no way in which a scenario where an election is not called before the next budget is due, and an orderly change-over implemented, as is normally the case in our democracy - can be anything other than wantonly destructive.

Gordon Brown has until the end of January to avoid a minor disaster,  and risks the deluge.


Botogol said...

resurgence in inflation is already here, it seems

hatfield girl said...

Yes, Botogol.

Regardless of who writes the next budget it's essential that it is really the budget, not a spoof, or absent all together. That requires a general election to be called almost immediately. 6 May is suicidal.

Elby the Beserk said...

HG - Brown is clearly mad. Expect nothing from him that could be remotely categorised as "normal" or "altruistic". This is a man whose ego is defended by nuclear weapons.

hatfield girl said...

But Elby, madness cannot explain the failure on the part of the government to recognise the importance of the budget and the effects of a budget that will be at best a holding operation and more likely a populist act of irreponsibility which, of itself, could cause a cascade of effects.

The numbers in the blog post are not unreasonable. The timetable -from now through the budget up to the expiry of the Parliament - is what it is.

The Brown government is not in a position to deliver a credible budget, with all the consequences that will bring; is bringing already.