|
Daily Mail, London, Alex Brummer column
(Daily Mail (London) (KRT) Via Acquire Media NewsEdge) Jul. 26--The second-quarter growth figures will mean the end of denial at the Treasury. The fiction maintained for much of this year, notably in the March budget, was that Britain was better placed than other countries to weather the credit crunch and avoid slump.
Data just released by the ONS could mean that far from being better placed, the UK could be the first of the Western economies into recession.
The force behind the fall in output to just 0.2pc or 1.6pc year on year was construction.
This will not come as a major surprise given the parlous state of the housebuilding industry and the over-supply of commercial property.
But the building industry is not alone. The industrial sector was down 0.5pc in the quarter and 0.8pc year on year.
The greater part of the British economy is services. But there is not much joy from here either.
Aside from transport and communications, which looks healthy, the rest including hotels and business services is slowing dramatically. The bloodshed in the financial sector is under way with some of the high street banks, including HBOS, thought to be looking at heavy redundancies as they seek to bring costs under control at time of slowing income growth.
Where then does this leave us? Private sector economists who felt recession could be avoided are rapidly changing their minds.
They suggest there will be little if any output growth in the second half of the year.
If there is a silver lining it will be for home owners. It is unlikely that a deeply split Monetary Policy Committee will raise interest rates to deal with inflation against such a gloomy backdrop.
David Blanchflower, the MPC's leading dove, who regularly votes for a cut in bank rates, could turn out to be the wisest man of all.
POWER PLAY: The idea of Electricite de France (EDF) ending up in control of Britain's nuclear industry does not lift the spirits. Yet that is precisely what is likely to happen next week when it makes an ?11bn offer for British Energy with government support. The presence of Centrica as a minority investor is the only saving grace as it is a company which is more directly sensitive to UK interests.
Ahead of the deal, EDF has taken the opportunity to raise gas prices by 22pc and electricity prices by 17pc, an indication of the influence it already has over British households.
Meanwhile, in its native France EDF has managed to spew radioactive particles from a pipe contaminating 100 employees. This plant is run by a unit of Areva, one of the contractors likely to be building the next generation of UK nuclear generators.
EDF may not get a totally clear run. As reported, power regulator Ofgem is known to have reservations about the market power conceded to the French group if it takes control of British Energy and may refer the whole sordid business to the Competition Commission. It would be the supreme irony were the CC, granted great independence by New Labour, to throw a spanner in the works.
As I understand it, the government in the shape of John Hutton and the Department of Business, Enterprise & Regulatory Reform is fully on board for the EDF bid. It may also be keen to see Centrica there for political cover given this week's unheralded visit by Sam Laidlaw and Roger Carr, the company's chieftains, to Number 10.
Labour also wants a second track. It is encouraging a raft of bidders to put forward proposals for building new plants on sites controlled by the government-owned Nuclear Development Authority. This it thinks will speed up Britain's nuclear future. Because testing of nuclear stations takes so long, it will have two separate projects running at the same time. Before the last election the government claimed that there was no commercial interest in giving Britain a nuclear future. Now it has done a 180 degree turn.
Paradoxically, it will almost certainly mean buying equipment from Westinghouse which Gordon Brown sold of to Hitachi for ?2.5bn in 2006. So much for joined up thinking.
WEEKEND DEALS: It is quite useful that almost all the crises in American banking including Bear Stearns and Freddie Mac and Fannie Mae come before the weekend. This allows the authorities to marshal their forces over the weekend and come up with a rescue plan.
The latest victim is Washington Mutual. It has been bailed out once with capital injection from the Texas Pacific Group, but the shares are more than 40pc down since then. As the nation's biggest savings and loan it is unthinkable that it will be allowed to fail.
But it wouldn't be a surprise if we woke up on Monday to find it is under new ownership.
To see more of the Daily Mail and the Financial Mail on Sunday, or to subscribe to the newspaper, go to http://www.thisismoney.com.
Copyright (c) 2008, Daily Mail, London
Distributed by McClatchy-Tribune Information Services.
For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
[ Back To TMCnet.com's Homepage ]
|
INDUSTRIES
Activate Email 
Find Solutions for Enterprises, SMBs & Service Providers at the INTERNET TELEPHONY Conference and EXPO East, January 20-22, 2010. Miami, FL.
