The UK economic outlook: Managing the downside risks – John Gelmini

LONDON - OCTOBER 21:  A pigeon flies past a Jo...

LONDON – OCTOBER 21: A pigeon flies past a Job Centre sign in Westminster on October 21, 2010 in London, United Kingdom. The Office for Budget Responsibility has forecasted that up to 490,000 jobs in the public sector could be lost in the next four years, after yesterdays spending review announcement by Chancellor of the Exchequer George Osborne. Mr Osborne has defended the UK spending cuts he announced yesterday after Labour and other critics claimed that slashing welfare and housing benefits would hit the poorest in society hardest. (Image credit: Getty Images via @daylife)

The other day I re-blogged the UK Office of Budget Responsibility (OBR) monthly performance commentary. The absence of good economic news made me focus on the risks and their effective mitigation. I posed four open questions:

For me, here are some open questions:

  1. What are the downside risks for the year?
  2. What emergency actions should the Government take in risk mitigation?
  3. How will the Government achieve more rapid cuts in Public Spending because of the depressed Private Sector?
  4. Will this Government ever be brave enough to face up to the required transformation in the Public Sector, or will further cuts fall on front-line services?

I am now re-blogging the response that I received from John Gelmini:

The possible answers to the questions you posed are:

1) The economy continues to shrink, Greece and possibly another Eurozone country implodes financially and we bail it out before it happens.

We get embroiled in a wider war in the Middle East and are dragged into a conflict without the military resources to fight it but do so anyway on borrowed money.

Food price inflation due to the American drought and increased oil prices and fuel prices pushes more people into bankrupcy.

Credit is tightened by the banks.

Unemployment in all its forms stays high and the trade gap running at £5 billion gbp a month pushes us further into debt and as we drive less, Petroleum Revenue Tax revenues fail leaving too little money for the NHS

2) The UK is given a Credit Downgrade, so the Government is forced to act decisively

3) Taxes are cut, writing down allowances are made more generous, we start public works on a grand scale using Eastern European labour and people from the dole placed on compulsory Workfare.

A T.A.R.P. programme is initiated, the pace of outsourcing is increased, the Beecroft Reforms are enshrined into emergency law and public holidays are cut to 4 weeks maximum.

4) No

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3 responses

  1. Pingback: Radical reform of PFIs – John Gelmini « Dr Alf's Blog

  2. Pingback: Why UK Chancellor George Osborne will not be allowed to use the axe on the Public Sector – John Gelmini « Dr Alf's Blog

  3. Pingback: Increasingly Tory MPs must worry about life after the next election – John Gelmini « Dr Alf's Blog

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