In an extraordinary admission about the severity of the economic downturn, Ed Balls even predicted that its effects would still be felt 15 years from now. The Schools Secretary’s comments carry added weight because he is a former chief economic adviser to the Treasury and regarded as one of the Prime Ministers’s closest allies.
Mr Balls said yesterday: "The reality is that this is becoming the most serious global recession for, I’m sure, over 100 years, as it will turn out."
He warned that events worldwide were moving at a "speed, pace and ferocity which none of us have seen before" and banks were losing cash on a "scale that nobody believed possible".
The minister stunned his audience at a Labour conference in
"The economy is going to define our politics in this region and in
Philip Hammond, the shadow Chief Secretary to the Treasury, said Mr Balls’s predictions were "a staggering and very worrying admission from a cabinet minister and Gordon Brown’s closest ally in the Treasury over the past 10 years". He added: "We are being told that not only are we facing the worst recession in 100 years, but that it will last for over a decade – far longer than Treasury forecasts predict."
The minister’s comments came as the Chancellor, Alistair Darling, admitted the global economy was "seeing the most difficult economic conditions for generations". Writing in today’s Independent, Mr Darling said his plans for shoring up
Yesterday, the Financial Services Authority warned that the recession "may be deeper and more prolonged than expected", adding that the global financial system had "suffered its greatest crisis in more than 70 years".
Speaking to Labour activists in
He said: "People are quite right to say that financial regulation wasn’t tough enough in
The other great depressions
* Long Depression, 1873-96
Precipitated by the "panic of 1873" crisis on Wall Street and a severe outbreak of equine flu (Karl Benz’s first automobile did not chug on to the scene until 1886), it was remarkable for its longevity as well as its global reach. In
* Great Depression, 1930s
The "Hungry Thirties" were rough on many, at a time when welfare systems were rudimentary. The worst period was from the Wall Street Crash of 1929 to about 1932, but in places such as Jarrow, the unemployment rate hardly dipped below 50 per cent until the economy was mobilised in 1940. However, for many in the south and for the middle classes, the times were relatively prosperous.