The Great Debate UK

Little room for manoeuvre in budget



–Gerard Lyons is chief economist at Standard Chartered. The opinions expressed are his own. Lyons will also blog his post-budget thoughts on The Great Debate.–

The outcome of this financial crisis depends on the economic fundamentals, the policy response and confidence. Chancellor Alistair Darling presents this Budget in an environment where the fundamentals are poor, confidence has been shot to pieces and the credibility of policy and his ability to spend any more is being widely questioned.

There are three key areas to focus on in this Budget. First, the Chancellor’s economic assessment. Second, his fiscal sums and how he can afford any further help to the economy. Third, his longer-term ambitions, aimed at reducing the budget deficit without killing the recovery whilst winning over the electorate and the markets. It is often said bad things come in threes. On the eve of his Budget, Darling will know that only too well.

First, the economic outlook. The Treasury often views The City’s forecasts as being too pessimistic about growth and too optimistic on the budget deficit. This time, the market’s growth expectations are terrible, and rightly so. People and companies have cut spending agressively, and the economy looks like it will decline anywhere between 3 percent to 4 percent this year.

from The Great Debate:

G20 ends Anglo-Saxon era

Paul Taylor Great Debate

-- Paul Taylor is a Reuters columnist. The opinions expressed are his own --

Thursday's G20 summit may not mark the end or even the beginning of the end of the global recession. It did mark the end of the ascendancy of the unfettered, Anglo-Saxon model of capitalism.

What comes next is far from sure, but it will be different from the headlong dash for individual enrichment, short-term profit and financial acrobatics that began with the dominance of U.S. President Ronald Reagan and British Prime Minister Margaret Thatcher in the 1980s. The widespread acceptance of increased regulation would have been anathema for U.S. President Barack Obama's predecessors.

from The Great Debate:

Economic stimulus Beijing-style: I treat, you pay

wei_gu_debate-- Wei Gu is a Reuters columnist. The opinions expressed are her own. --

Beijing may criticize American consumers for spending money they do not have, but the truth is Chinese leaders do the same, they just make sure it doesn't end up on their account.

In its $585 billion economic stimulus package, the central government is contributing just a quarter of the funds needed, leaving the rest of the tab to banks, local governments and the private sector.

from The Great Debate:

Buck-passing augurs ill for G20 summit

Paul Taylor Great Debate-- Paul Taylor is a Reuters columnist. The opinions expressed are his own --

The foreplay to next month's G20 summit is degenerating into a buck-passing exercise rather than crafting a Grand Bargain to save the world economy and regulate capitalism.

The industrialized powers do not agree on how to arrest the steep slide in output, how to handle collapsing banks, how much market regulation is needed, how to reach a world trade deal and prevent protectionism, or how to redistribute power to emerging nations in exchange for their money.