Whether similar challenges in 2010 will also hit the US is a hot topic of debate. Certainly in Europe the concern is growing that the modest growth could hit another wall and many countries could fall back into recession. Either way, the UK situation continues to be quite bad. The reliance on the financial industry to generate business by the Blair team has turned out to be a major failure. Digging out of the hole created by bankers is going to take a long time. The Guardian:
Terry Smith, chief executive of money brokers Tullett Prebon, said: "We will have a crisis of confidence in the credit worth of the UK. People won't be willing to buy gilts at anything like the current interest rate, or even possibly in this currency and we'll have an interest rate hike and/or a good, old-fashioned sterling crisis. Possibly both."
Smith's comments on Sky News came just hours after ratings agency Fitch said that the UK – along with France and Spain – needed to "articulate more credible and stronger fiscal consolidation during the course of 2010 to underpin confidence in the sustainability of public finances".
Failure to do so, the ratings agency added, would greatly increase the chances of a debt downgrade, which would increase the cost of servicing the national debt.
