It is virtually impossible to avoid talk of the credit crunch these days and the recession which is engulfing the UK and Ireland (and much of the rest of the world). Robert Peston’s BBC blog is the epitome of how new media is charting the financial crisis, and some would argue even contributing to it. It seems most are in agreement that 2009 is going to be bad: for business, for the economy and for jobs. The question that needs to be asked, however, is how will the UK and Ireland recover beyong the low point? Some sort of recovery is inevitable, but will it be enough to reinvigorate the financial system? If it isn't, then complete, rather than partial reform, could be on the cards.
If 2009 is to be the low point, what will happen in 2010 or 2011? If the economy revives sufficiently well, then the long-term impacts can be minimised and in years to come, this ‘global recession’ could be seen as blip. Britain’s bouncebackability will be tested to the max. The real danger in the long-term is if the recovery is not sufficient, if we don’t bounce back high enough. Then the UK and Ireland could slip into the same sort of financial malaise that has engulfed Japan and East Asia. The long-term effects of this could be much worse than what we are going through at the moment.
Gordon Brown may have forlornly boasted about getting rid of boom and bust, now he may be hoping that it is not quite simply all bust and no boom.