Analysing the downturn

Gordon Brown doesn't come across as the nervous type but revelations regarding the proposed smear campaign have only diverted attention from further economic woe

There were fears for both him and New Labour this week after the departure of Brown’s aide, Damian McBride. Apparently it was something to do with a smear campaign against the conservative leader, David Cameron, and some of his Tory colleagues.


It’s only a punt, but my guess is that becoming embroiled in a political row with the opposition is the very least of Brown’s worries. After the euphoria of the G20 Summit another reality check on the state of the British economy has arrived.


Last month saw another fall in British manufacturing output. The 0.9 percent decline means output from factories is now 13.8 percent lower than a year ago – the worst state since1981 – when UK's industrial capacity shrank by one sixth.


The production freeze has become so marked that it could be argued the current crisis is now worse than the period in the1970s when the three-day week almost sent Britain back to the dark ages. Just in case anyone doubted the scale of the problem, the quarterly fall in manufacturing output is officially the worse since 1968 when records began.


There has been much support in recent weeks for attempts to talk up the economy, while some analysts have looked to blame ‘negative media’ for the failure of those green shoots of recovery to take told.


It’s a simplistic psychology with an ounce of credibility, but one that is about as helpful as a dog owner telling his 14 year-old pet slouched on the operating table he has his whole life ahead of him. The lights are on but no one’s listening. 
Positive figures from the Nationwide Building Society showed the average value of a UK home increase by 0.9 percent in March, combined with the Bank of England revelation that home loans rose by 19 percent in February, was cause for some celebration.


Both of these seemingly important stats will inevitably prove to be a false dawn before the spring is out. The best benchmark for recovery is America where our destiny is tied. US house prices last week showed a significant decline on top of the 19 percent already suffered in the past year.


Our financial institutions remain locked into the US markets tighter than a missing toddler re-united with his grandmother on an ocean cruise.


According to Obama, the economy is showing signs of hope for recovery. The economic downturn will next month become the longest US recession since the Great Depression.


The Labor Department reported the economy lost 663,000 payroll jobs in March as the economy shifts to lower levels of production and employment, and higher rates of temporary workers. The economy has now lost 5.1 million jobs since December 2007.


Signs from other major economies is little better. Latest figures from Germany show industrial output fell for a sixth successive month.


A ‘furious’ David Cameron has apparently demanded a personal apology from Brown. No, not for the state of our destabilised economy.


The latest revelation of a planned smear campaign against the Tories set the opposition off in a tangent aside from the stifled economy.


Senior Labour advisors are supposedly queuing up to tell Brown this week that such behaviour cannot happen again if he is to win the general election. 
He must be nervous then.