"Please, don't encourage politicians to lie or be economical with the truth. It should not be acceptable to let them lie."
It’s a fair one. You’ll recall that on Monday we were talking about Alistair Darling’s weekend truth outburst. The chancellor had told the nation what we all already know — that the economic situation is bleak.
"What Darling has done is confirm fears," wrote Theo. "Consumers, investors and businesses that were not previously worried, now are. They have been told from the highest office in the land that it’s time to cut back."
If you regularly read Fleet Street Daily, you’ll be used to hearing that things are bleak (I don’t especially enjoy writing as much, but the way things are are the way things are). But, believe it or not, there are some people who still set store by the official government forecast that the economy won’t enter recession.
So you’d expect negative talk from the chancellor to have an economic impact (indeed it did. The FTSE 100 and the pound fell hard on the back of Darling’s comments).
But I take our reader’s point on board. We don’t encourage the chancellor to lie. We’re just acknowledging that his moment of honesty has made a bad situation that little bit worse.
Not that it makes much odds this late in the game. Darling could talk the economy up, down or sideways for all the difference it would make now — as an influential new report demonstrates.
The Organisation for Economic Co-operation and Development (OECD) has published its growth forecasts for the G7 group of leading economies. Here’s what the OECD predicts for the rest of this year:
GDP Growth in the G7 countries (annualised quarter on quarter growth, %)
| 2008 Q3 | 2008 Q4 | |
| Japan | 2.4 | 1.4 |
| United States | 0.9 | 0.7 |
| Canada | 0.8 | 2 |
| G7 | 0.8 | 0.7 |
| Euro | 0.4 | 0.8 |
| France | 0.2 | 0.6 |
| Germany | 0 | 0.1 |
| Italy | 0 | 0.6 |
| United Kingdom | -0.3 | -0.4 |
Source: OECD
As you can see, it reckons the UK has already slipped into recession. By the end of this year, according to the forecast, we will have posted two consecutive quarters of negative growth.
Alarmingly, the OECD reckons Britain’s is the only major economy that will hit recession this year. So if they haven’t already, the newspapers will soon be raiding their archives for those ‘sick man of Europe’ articles penned 30 years ago.
One thing is abundantly clear. Going forward, Britain will be a bad place to do business. This, we expect, will have a negative impact on investments.
But there is protective action you can take. We’ve already identified one major global trend which British investors can exploit. This trend is set to continue regardless of what happens to the British economy. Find out here how you could profit from this trend.
And later this week I’ll be unveiling a brand new report that offers you an alternative to stocks. We expect the investment we’ve identified will actually benefit as Britain’s economy weakens.
More on that, later in the week.
Follow the world’s best-known emerging markets guru
Manraaj Singh is still away in Asia. Holding the Profit Hunter fort is Frank Hemsley, who’s noticed something rather interesting...
Seems our Manraaj is on the same wavelength as one of the world’s leading emerging markets guru. Both he and Mark Mobius, of Templeton Asset Management, are bullish on frontier markets — and one in particular.
"[This market] is a young market, but the potential is immense," says Mobius.
And Manraaj has found a way UK investors could profit from this market — without being exposed to many of the risks associated with investing overseas.
Find out how you could make money from this frontier market with "immense potential"
Until tomorrow
Ben Traynor
Editor
Selected articles:
Frank Hemsley on the frontier market with immense potential.
Garry White on why Britain’s energy strategy could be back on track.
There is no Daily Reckoning today
Bill Bonner is on a plane all day today. The logistics of aviation therefore prevent Bill from sending us his reckonings (though I suspect he may reckon with fellow passengers during the flight).
P.S. If you enjoyed this article then we encourage you to sign up for the free Fleet Street Daily eletter. Learn what you can expect from today's markets -- and how to prosper in the face of uncertainty. You won't find more thought provoking writing anywhere on the Internet.
