The R Word

Judging by the recent headlines in the media Britain is poised on the brink of recession, or at least talking itself into one.

Capitalism is without doubt the best economic system thus far created by mankind. However, its fundamental weakness is that it relies on confidence in the future; knock that confidence away and you undermine the system.

That aside, warnings about a possible recession are now coming thick and fast David Frost, director general of the British Chambers of Commerce, has warned that there was a "real risk of recession in the coming months". He has noticed a distinct adverse change of mood in the last three weeks

I have noted a number of times that the last thing that needs to happen now is for the Bank of England to raise interest rates, or for Brown to raise taxes. David Kern, economic adviser to the British Chambers, has also argued that the Bank of England must resist "misguided calls" for higher interest rates.

Mr Frost is quoted in The Birmingham Post:

"The temptation for the Government will be to raise business taxes in the next pre-Budget report (this autumn) because the Exchequer is running out of money.

This would be a catastrophe."

The question is, does the government actually have a plan?

I suspect not.

Posted in: bank of england,interest rates,recession,tax,treasury