One of the most alarming things at the moment is that no one appears to know what is going to happen next in this financial crisis. When in today’s Times interview Alice Thomson and Rachel Sylvester asked the City Minister Lord Myners whether there will have to be more bank bailouts, he replied: “There may well be. Who knows? It depends how we negotiate these things.” Hardly an answer that fills one with confidence. The doomsday scenarios also no long seem as far-fetched as they once did. Just yesterday at lunch in the City, I was told in a matter of fact fashion that Britain would have to call in the IMF in 2012. There are also—as Camilla Cavendish laid out yesterday—an uncomfortable number of similarities between Britain’s position and Iceland’s.
Peter Oborne’s column this morning details where Brown and Darling have gone wrong. As he notes, it is as remarkable as it is worrying that the two of them believed that the British economy would be growing again by the third quarter of this year. Oborne’s assessment of where the country will be when this ends makes for sobering reading:
“At worst, we face national insolvency and Latin-American-style inflation. At best, our living standards will fall, our public services must be cut and Britain will decline to become a middle-ranking political power.”
The next government will inherit a mighty mess. It will have to be bold and reformist not cautious and managerial to get Britain back on the right track.