Tough Economic Times Are in Store for the British

Public debt is spiraling upward along with job loss numbers, despite the optimistic assurances of the Chancellor of the Exchequer, the top financial expert in Great Britain. Many expect that spending cuts and tax increases are inevitable, with only the amount to be negotiable. A run on the currency may force the government to seek aid from the IMF, the International Monetary Fund. This dire, even humiliating, scenario still appears remote, but discussion of it suggests that the pessimists are winning more converts. Politically, the situation presents significant problems for the current Labour government which must prepare for a general election in the late spring of 2010. Boosting taxes, even if targeting only the wealthy, is unlikely to impress favorably the average voter, nor will axing services or entitlements. A noticeable trend in Britons deciding to move abroad to Australia, seeking both sunnier weather and happier economic conditions, could become more than just a passing vogue.

The Conservative Party, led by David Cameron, although pleased by the prospect of regaining power after 11 years on the back benches, can predict that the nation's preoccupation with the financial crisis will continue. Proposals and schemes to instill confidence, hike employment, improve education, rouse the housing market, streamline the health care system, and, most importantly, generate more funds for the government are few and far between. The Labour Party, currently headed by the Prime Minister Gordon Brown, probably has little chance of retaining control of Parliament even under new leadership, whether Alan Johnson or Jack Straw, the names most often proposed as potential replacements for Brown. The Conservatives could conceivably invoke the name of Margaret Thatcher, a popular if controversial Prime Minister first named to the post 30 years ago this month, to indicate an intent to handle the economic predicament with vigor and firm resolve.

Barclays Bank, so far able to stave off a complete government takeover such as has recently happened to Lloyds Banking and the Bank of Scotland, is divesting part of its investment management unit, the San Francisco-based iShares which deals in ETFs. This move increases Barclays' capital and improves its negotiating stance with UK regulators. Meanwhile, bucking the experts and gambling that economic recovery cannot be far off, supermarket retailer Tesco is introducing additional banking services, including checking accounts, to an array of current financial offerings, from insurance to loan programs. Also swimming against the tide of gloom is American entrepreneur Donald Trump, whose huge hotel, housing development and golf resort project in Balmedie, Scotland is slated for groundbreaking early in 2010.

The British have faced financial crises before and managed to survive; so, in time this trouble too should pass, likely leaving some minor mark on society in general, possibly a new mania for frugality for example. Critics referring to London as "Reykjavik on Thames" are far too harsh, as the situation in the UK is not truly comparable to Iceland's banking industry meltdown. London as a financial powerhouse may have stumbled but is hardly out of the game completely. Perhaps the country is on a tightrope. Here's a quote from a poem from newly named British poet laureate Carol Ann Duffy, "You want him to fall, don't you?/ I guessed as much; he teeters but succeeds./ The word applause is written all over him."

Carol Ann Duffy, Wikiquote poetry compendium
William Rees-Mogg, "The Labour leadership: no change, no chance", London Times
"Record number of Britons moving to Australia: survey", The Australian
Landon Thomas, Jr., "Harder-Edged Warnings About Britain's Economy", New York Times
Paul Rogers, "Quarrels Continue Over Trump's Golf Project In Scotland", Luxist
Jane Bradley, "Tesco banks on financial service arm expansion", The Scotsman
David Jolly, "Barclays Sells a Fund Unit in Effort to Keep Government at Bay", New York Times