Is there anybody out there who has heard of this small banana Island?

The Dutch Clown

Established member
592 11
May 22 (Bloomberg) -- When Gordon Brown took over as Britain’s Labour finance minister in 1997 after 18 years of Conservative rule, he pledged “sustainable public finances” to cut a debt load that was near the highest in more than a decade.
Brown, prime minister since 2007, is leaving the next government -- either his own or one led by the Conservatives -- a mess worse than the one he inherited.
Standard & Poor’s yesterday highlighted the task facing the next finance chief, saying it may cut Britain’s AAA credit rating for the first time as debt heads to 100 percent of gross domestic product amid the worst recession since World War II.
“We have gone full circle,” said Danny Gabay, director of Fathom Financial Consulting in London and a former Bank of England economist. “Like then, there was a massive collapse in the fiscal position. Whoever is in government won’t have the luxury of waiting because the situation is pressing.”
Debt costs will consume 6.9 percent of government spending by 2013, double the current rate, crowding out funds available for roads, schools and hospitals, according to the independent Institute for Fiscal Studies in London. The government expects to spend 60 percent more servicing debt next year. By 2014, it will be paying lenders almost as much as it spends on defense.
Gilt Sales
Britain needs to sell a record 220 billion pounds ($344 billion) of bonds in the fiscal year through March 2010. Chancellor of the Exchequer Alistair Darling says the budget deficit will reach 175 billion pounds, or 12.4 percent of GDP, the highest among the Group of Eight nations.
Since S&P lowered the U.K. credit outlook to “negative” from “stable” yesterday, the pound has fallen to $1.5809 after a five month rally against the dollar, the FTSE 100 Index slid 2.3 percent, and the cost of insuring U.K. debt against default rose by 7 basis points.
The move couldn’t have happened at a worse time for Brown, who trails in opinion polls and is struggling to overcome a scandal regarding expense reimbursements provided to lawmakers - - a controversy that toppled the Speaker of the House of Commons for the first time since 1695.
A BPIX Ltd. survey published May 17 showed Brown, who must call an election by June 2010, lagging behind the Conservatives by 22 points.
Tax Increases
“Does this government in its current state have the steel and the authority to put through a painful program of tax increases and spending reductions and nurture the economy in a consensual way through a period of difficult economic adjustment?” said George Magnus, senior economic adviser at UBS AG. “No. The politics just aren’t right.”
Regardless of whether Brown’s Labour Party or David Cameron’s Conservatives win the next election, Britain is headed for years of pain as the government raises taxes and slashes spending to restore credibility with investors, economists say.
“The huge deficit will still require significant and active tightening of fiscal policy,” said Ben Broadbent, a U.K. economist at Goldman Sachs Inc. in London.
A credit rating cut may drive government borrowing costs higher, eating further into what a Brown or Cameron government can spend on public services.
Borrowing Costs
Fathom’s Gabay said the average interest rate paid by the government following a downgrade may rise to about 7 percent. That rate was last seen in 1997, and, because of the size of the debt, servicing costs as a share of the economy may rise to their highest since 1946.
The government estimates it will devote 5.9 percent of spending to paying interest by 2011, jumping from a low of 4.1 percent this year. That’s still less than the 9.1 percent when Brown became chancellor in 1997.
For now, the Treasury plans on paying an average interest rate on outstanding debt of 4.8 percent from April 2010. That compares with averages of 10 percent in the early 1980s and 7 percent in the 1990s.
With the economy shrinking, tax revenue is crumbling and the deficit ballooning. The government says debt may total 1.4 trillion pounds by 2014 from about 600 million pounds last year.
Darling has already announced a spending squeeze and higher taxes that will boost Treasury coffers by almost 27 billion pounds a year. The International Monetary Fund said earlier this week that those steps aren’t enough to restore the government’s finances and urged further action.
‘Reputation’
“Britain’s economic reputation is on the line,” said George Osborne, the lawmaker in charge of Treasury affairs for the Conservatives. “Unless Britain has a government with a credible plan to reduce debt, there will be a further downgrade, with all of the serious consequences for our prosperity that would entail.”
Debt and ratings concerns are already starting to affect other countries. Yesterday, U.S. Treasury Secretary Timothy Geithner committed to cutting the budget deficit as concern about deteriorating creditworthiness deepened.
Britain’s debt next year will be 66.9 percent of GDP, exceeding Canada’s 29.1 percent and Germany’s 58.1 percent, according to April 22 forecasts by the IMF. The U.S. will be at 70.4 percent, and the 16-nation euro area at 68 percent, according to the Washington-based lender.
“We’ll get to 100 percent quite easily,” said Colin Ellis, an economist at Daiwa Securities SMBC Europe Ltd. in London. “The public finances are really in trouble.”

=======================
From Europe with LOVE.
 

The Dutch Clown

Established member
592 11
Far away Island

May 22 (Bloomberg) -- The U.K. refused to release the results of stress tests conducted on British banks, two weeks after the Federal Reserve said similar reviews showed 10 U.S. lenders needed to raise a total of $74.6 billion.

Publishing the information may increase instability and force the government to take further action to shore up the U.K. financial system, the Treasury said in response to a Freedom of Information Act request by Bloomberg News that sought the test results and criteria used to evaluate banks. U.S regulators said publishing their findings would ease concerns about lenders.

“Keeping the information under wraps will only serve to create more uncertainty in the long term,” Vince Cable, the opposition Liberal Democrats’ spokesman on treasury issues, said in an e-mailed statement. “We need a system that is as open and as transparent as that in the United States.”

The Financial Services Authority carried out stress tests on U.K. banks earlier this year to determine their ability to withstand losses amid the worst recession in 60 years. Barclays Plc is the only bank to have disclosed its results, saying it will continue to meet the regulator’s capital requirements under various credit risk, market risk and economic scenarios.

Disclosure of the results “at this time may lead to uncertainty in financial markets, either in relation to specific institutions or more generally,” the Treasury said in its response to Bloomberg. “Such instability could require further action by the authorities.”

The same request to the FSA was rejected on the grounds it would be too costly to retrieve the documents. Lesley Richardson, an FSA freedom of information officer, said the results wouldn’t be released in any case because the information was confidential.

Bank Aid

The U.K. has committed as much as 1.4 trillion pounds ($2.2 trillion) to bolster the nation’s banking system through direct investments, asset insurance and underwriting loans. The government has nationalized Northern Rock Plc and Bradford & Bingley Plc, and taken controlling stakes Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc.

The scenarios used to test Barclays’ assets included a 50 percent drop in U.K. house prices and a recession lasting two years, the Financial Times reported in March, without saying where it got the information. Alistair Smith, a Barclays spokesman, declined to comment.

The Federal Reserve gave banks six months to fill any capital shortfalls identified by the U.S. tests or face expanded federal ownership. At the time, Chairman Ben S. Bernanke said releasing the findings should reassure investors about the soundness of the financial system.

Transparency Questioned

“The transparency of companies over the last few months has significantly improved so it is ironic that the one body who isn’t joining in the transparency is the regulator itself,” said Ian Gordon, an analyst at Exane BNP Paribas in London.

Representatives of RBS, Lloyds, Northern Rock and HSBC Plc declined to comment on whether they passed the U.K.’s stress tests when contacted by Bloomberg News.

Bank stress test results should be made public to improve risk management, Andrew Haldane, executive director for financial stability at the Bank of England, said in a speech in February.

“There is a case for having these results set out regularly in firms’ public reports,” he said. “Having a standardized, published set of such stress-testing results would help improve financial markets’ understanding and hence pricing of bank-specific risk.”

Haldane wasn’t available for comment yesterday.
 

TheBramble

Legendary member
8,395 1,170
Hardly the Golden Age for any of us, eh?

Dutch economy declined by 4.5 percent in the first quarter of 2009
•By far the largest negative growth after the Second World War
•Exports and investments down by over 10percent
•Now households spending less as well

We're all in this together it seems.

Gezellig
 

The Dutch Clown

Established member
592 11
Bambam,

As founding member of the European thing with rock solid EURO we manage to keep and even grow our investment position throughout the world. Since all our pubs continue to serve drinks the public has no idea there is a crisis in the rest of the world. As true traders we managed to sell off some bank stuff to greedy Scotsmen and a Belgian count and bought some (profitable) of it back for less. The only two company’s we merged with the Brits in the past are doing not so well so we are downsizing in those and redirecting into future growth areas.

Business as usual.
 
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TheBramble

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The only problem being you have all gold-bricked yourselves into a totally self-sustaining EuroZOne ghetto as nobody from anywhere else can afford to stay there, even if they can afford to get there in the first place.

As was once joked of the Brits attitude to Continental Europe - “Fog in the Channel, France cut off”, CE is a victim of its own current success. We now have a somewhat stronger Euro, but the entire Euro-Community continually being weakened by further acquisitions of the economic, cultural and social equivalent of ‘toxic debt’.

No doubt, with the skill and precision (not to mention value for money) for which British Politicians are World famous, Gordo (or his imminent replacement perhaps) will have the UK adopt the Euro just in time to watch it plummet against the other majors.
 

The Dutch Clown

Established member
592 11
Dear Bambam.

Nothing in the world is perfect and so is the EC not perfect either however when we now are able to shop in London like in a third world county and one is eager to get some EURO’s in really tells a story or so about the UK currency rather than the euro. There are quite a few challenges within the EC and it will cost us a few euro to keep them on board but if one cares to have a look at the big picture an economic region is getting shape.

The new order of things and since politics in the UK has more to do with ripping of the people than serving the peoples interest might raise an interesting question why we should allow the UK to join the euro anyway and at what cost. We might even be better of without the Isle of Europe or wait for a while and find a cheap labor area close by.

Looking into the future.
 

TheBramble

Legendary member
8,395 1,170
Nothing in the world is perfect and so is the EC not perfect either however when we now are able to shop in London like in a third world county and one is eager to get some EURO’s in really tells a story or so about the UK currency rather than the euro. There are quite a few challenges within the EC and it will cost us a few euro to keep them on board but if one cares to have a look at the big picture an economic region is getting shape.
Well, any shape is a shape, even a bad one. But your comments are quite correct. Not quite 3rd World just yet, but it clearly has aspirations…and apparently unbending intent…

The new order of things and since politics in the UK has more to do with ripping of the people than serving the peoples interest might raise an interesting question why we should allow the UK to join the euro anyway and at what cost. We might even be better of without the Isle of Europe or wait for a while and find a cheap labor area close by.
An interesting point. I don’t think too many Brits would be pleading their case even if they thought it might serve their interests. There are issue quite beyond economic sense to be considered and which will hold sway in the event. The reverse psychology of outright and widespread rejection should do it. As with De Gaulle’s famous and long-term ‘Non’ which only made the Brits ever more resolute to join the fun, little realising it was to be quietly and thoroughly pillaged of that which they had to offer. Now it is as grey/brown and average and lifeless as one could hope for.

And as for cheap labour, I am sure the current British working work force, the Alojzys, Bogumils and Czeslaws, will be delighted to find work closer to home, which in fact will become their new home. And it is right and fitting that at long last, the Dutch should return the favour from which they have so massively benefitted from the Great British Public for so many generations. The Brits are by far in the majority the supporters of the Dutch manual workforce in being avid patrons of this group, albeit in the somewhat niche area of adult entertainment, at which your country’s great capital quite rightly holds pole position, or perhaps soon, Pole position?

What goes around comes around – unless you’re quick enough to duck….
 
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