Monday, 8 June 2009

Has GB saved GB?

The political dramas in the UK have swept away the financial issues that preoccupied us just a few months ago. The question now: is the worst over? Many of the lead indicators of recovery are well established. In particular the rally in global equity markets appears well grounded and the banks are finding it much easier to raise finance. The money markets have started to open up and the US supported market for toxic assets is starting to relieve the gloom in the banking sector.

The Bank of England and the Treasury are convinced that the turn around in GDP will occur over the next six months and positive growth will be established in the final quarter. By the 2nd quarter of next year the recovery will be well established and the UK government will be planning the sale of some its higher quality bank assets. Suddenly the government's economic strategy will be working and guess who will claim the credit for saving GB - GB of course and all those who said he had it wrong may have a tough time convincing the electorate.

This is the sunrise scenario - my money is with a May 2010 election which the Labour party will win - I think the balance of probabilities has just tipped that way.

1 comment:

Anonymous said...

If he manages to stay in power! His party seems to be closing in on him, and the convservatives are getting stronger. No doubt he is a shrewd man capable of taking the big decisions, but he just doesn't have the charisma of a Tony Blair. Not convinced he can win over the people in a general election, smiles or no smiles.