Gordon Brown, Scottish Prime Minister-in-Waiting, who claimed the credit for British growth, concealing harmful changes to the British economy
Since 1992, the world economy in general has been enjoying sustained growth year on year.
Ken Clarke, Chancellor in the Major Administration, who set British economic growth in progress with successive quarters of growth, leading to trade surplus and prosperity
In Britain, the growth pattern established as Chancellor Ken Clarke recovered from his predecessor’s attempt to prepare for a move to the Euro. Those countries that persisted in replacing their national currencies with the Euro proved the exception to the general world economic experience and suffered a number of setbacks that have been mitigated by breaking the basic mandatory rules set for European Currency Union.
The IMF is the latest organization to identify huge holes in the British economy. Worryingly, the IMF forecasts that British growth is entirely dependent on the growth in house prices and personal debt. Pundits are increasingly forecasting falls in both house prices and personal debt.
The US has already seen a correction in house prices. This has led to a rapid increase in the number of home owners unable to service mortgages with defaults and repossessions.
Britain is now showing signs that the long overdue correction to house prices may be sudden and severe. There are already indications that first step buyers are unable to obtain mortgages and a growing number of home owners are falling behind on mortgage payments. With further rises in Bank Rates forecast, this figure could increase dramatically.
Internationally, there are indications that those countries enjoying a long period of growth may now be seeing a downturn.
In Britain, the policies of Gordon Brown may see Britain suffering more severely than other countries. One reason for this is that a huge debt has been run up off-book by signing very costly long term PFI contracts which commit the Exchequer to as much as 30 years debt in servicing the contracts for hospitals and government buildings. This massive unseen debt has contributed in the short term to economic growth and to the rise in house prices. Relatively minor changes in world economic conditions could trigger a serious crash in Britain.
Further instability is likely if the Scottish Nationalists win seats as predicted and seek the break up of the United Kingdom. This presents a further problem for Gordon Brown who is a Scottish MP. If he is crowned as Blair’s replacement, he could take over as Prime Minister in Westminster as his Parliamentary seat in Scotland ceases to exist. A growing appreciation of this possibility may yet cost him the post of Prime Minister, triggering a change of the two top posts of Prime Minister and Chancellor.