CBI director John Banham got himself into trouble with his Tory friends last week by pointing out that the economy is still plummeting. In reply, confident noises have been made all round, in line with chancellor Norman Lamont's budget statement that the economy would begin to turn the corner' in the second half of the year.
Upward blips in the general decline are not impossible. But the overall situation is that Britain's secular economic decline, interrupted by the mid-80s boom years, has resumed with a vengeance.
The best estimates put the rate of decline of economic output at four nosedive per cent a year - roughly equal to the pre-1990 growth rate in Germany, although Germany's growth may decline because of the costs of reunification.
Last year something like 25,000 businesses went bust - a 35 per cent increase over 1989. And last month's record increase in unemployment to an official rate of over 2 million show the scale of the recession What has happened to the confidence of the mid-1980s Thatcher years? The British economy boomed in those years because the US economy did. 'Reagonomics' meant the vast pumping of state deficit finance into arms production, financed by massive borrowing from Germany and, above all, Japan.
The result was a speculative boom which boosted world trade but did nothing to solve the basic problems of either the British or US economies. Britain's industrial base was not restored; industrial productivity in the US took a back seat to the epoch of the junk bond dealers.
Like all speculative booms, the result was crash - in this case the November 1987 stock market crash. Once that had happened, the US and especially Britain were faced with the danger of resurgent 'stagflation' -falling output plus raging inflation.
The consequence has been the adoption of high interest rates and a sharply deflationary strategy. For Britain the only way to avoid pushing: down wages to crush inflation would have been allowing the value of the pound to fall. This is now excluded by membership of the European Exchange Rate Mechanism.
The consequences of the recession for the working class are stark. Unemployment will rise sharply exerting further downward pressure on wages. Employers will fight hard in 1991/92 to prevent wage settlements being nearly as high as they were in •No. 1 Im sorry Mrs B vere replacin you with this Sans 1989/90. We are back to the same cycle of decline as existed in the early 1980s. May 1, 1991
cialist Home News