UK Downturn Worse Than Expected

Source : The Straits Times, Aug 30, 2008

LONDON - BRITAIN's economic downturn is likely to be deeper and last longer than expected and could be the worst for 60 years, finance minister Alistair Darling said on Saturday.

In a candid interview with the Guardian newspaper, the Chancellor of the Exchequer said the government had failed to get its message across and would battle to persuade a sceptical electorate it deserved another term in power.

The paper's website quoted him as saying economic times for the country were 'arguably the worst they've been in 60 years'.

He added: 'I think it's going to be more profound and long-lasting than people thought.' Economic conditions presented the ruling Labour Party with its toughest challenge since the 1980s, he said.

'We've got our work cut out. This coming 12 months will be the most difficult 12 months the Labour Party has had in a generation, quite frankly.' Two days earlier, Bank of England policymaker David Blanchflower told sources that two million Britons could be out of work by Christmas.

Britain's economy failed to grow in the second quarter of the year for the first time since the early 1990s and many economists believed it had already tipped into recession.

Mr Darling's comments suggested growing unease in the highest ranks of the government that the downturn would make it difficult for Prime Minister Gordon Brown to recover popularity and fend off a resurgent opposition Conservative Party.

'We've got to rediscover the zeal which won three elections, and that is a huge problem for us at the moment,' Mr Darling was quoted as saying. 'People are pissed off with us.'

The BBC called Mr Darling's interview an 'astonishing intervention' and commentators are likely to question the wisdom of his comments on the economy before a planned relaunch by the government.

Mr Brown is expected to unveil a package of measures next week to support the economy and the housing market in what he hopes will be the start of a sustained campaign to regain the political initiative. -- REUTERS