Britains worsening financial crisis

Today the IMF has downgraded growth forecasts for the UK economy for the reaminder of 2012 and 2013. This stands in sharp contrast to the UK governments and the Bank of Englands own forecasts, and suggests that hopes for a resurgence in economic performance as a result of the Olympics may be in vain. Certainly if we look at the effect of hosting the Olympics for the last three hosts, Athens is in serious trouble and is still paying off the cost of the games, Sydney in Australia is struggling and even the global giant China is still counting the costs of being the host in 2008, and that was before the current global economic conditions really took effect. The likelihood is that the Olympics will not generate anything like the boost to the economy that many seem to be hoping for with many people choosing to stay at home, and the costs of hosting the games having rising by a staggering 1000% from the original estimates.

So, lets look at the more scenario for UK plc over the coming twelve to twenty four months. We have seen rapid increases in population over the last decade, predominantly in poorer inner city areas suggesting an increase in the unwaged and low income non tax payers. Combined with this we have a banking sector that refuses to loan to either businesses or individuals. Unemployment is heading towards record high levels, particularly in the under 25 age bracket, and the population as a whole is ageing significantly. The number of people in fuel and food poverty, those who cannot afford to heat their homes and put food on the table is rising and at the same time local authorities are facing massive budget cuts particularly in front line support services. The NHS is under tremendous pressure having been saddled with completely unaffordable public private finance projects being repaid over thirty years, the rail network is struggling with maintaining the infrastructure and rolling stock, and the cost of transport both public and private are increasing exponentially.

What all of this means is that even the downgraded IMF forecasts look optimistic to say the least and there is every chance that the second recession that we are already in may only get worse over the coming few months. One of the least reported aspects of the last four years is that many of those who have managed to stay in employment and hold things together have done so at the expense of their hard earned savings. Many people no longer have any sort of safety net, and any detrimental changes in their position will be catastrophic. Now is the time that everyone needs to wake up to the coming storm and take a leaf out of the book of the Icelandic people. Unlike the rest of the Western World the Icelanders decided to allow their banks to fail and used the vast amount of money that they saved in not bailing the banks out to instead bolster their economy, creating employment and stability that isn't being seen anywhere else. It is perhaps instructive that non of that is being reported outside Iceland, but of course, news of a voting population telling the politicians and bankers who caused this mess to get lost isn't something a media in the pocket of big business wants to put out there is it?