Conservative Conference

There was very little coming out of the Conservative party conference which could inspire the business world. David Cameron wanted business to reach out to new markets in merging countries, he called for the entrepreneuring spirit, but unfortunately the party members were not agreeing. He did say on carbon emissions that the UK WOULD NOT CUT CARBON EMMISSIONS FASTER THAN OTHER COUNTRIES. There was a lot of dissent amongst the so called party faithful, apparently a poll showed 68% wanted to leave the EEC. Most party members were of the mindset that they had lost the election [because they didn’t get a working majority], while the hierarchy were of the opinion they won the election. Party members were not pleased with the suggestion that they scrap the Human Rights act, and the promise that David Cameron would invest £23trillion to get the economy growing, went down like a lead balloon.


Moodys the credit agency has down graded 12 UK banks and building societies, due to the recommendations for ring fencing consumer banking from the riskier investment banking. Cameron had said previously that if banks were failing they should be left to fail. It is this knowledge that we are the only EU country to stop supporting our banks, which triggered the downgrades. This will make it harder, and more costly for our banks to borrow, which in turn will mean less business loans, higher interest rates and higher charges.

Chancellor George Osborne said that the downgrade was a response to the government's move away from guaranteeing Britain's biggest banks and what he called the "too big to fail" problem.

"People ask me, how are you going to avoid Britain and the British taxpayer bailing out British banks in the future?," he told the BBC. "This government is taking steps to do that. Therefore, credit rating agencies and others will say; 'actually, these banks will have to show that they can pay their way in the world'.

"I'm confident that British banks are well capitalised - they are liquid, they are not experiencing the same problems that some of the banks in the Eurozone are experiencing at the moment."

There is still a suspicion that Greece will default, which will be catastrophic for the UK as well as the EU. Although UK banks aren’t heavily exposed to Greek debt, they are to Italy and Spain, which have been downgraded by the Fitch agency.

"Of greater concern to Fitch is the small but no longer negligible tail risk that a further worsening of the Eurozone debt crisis and volatility in the value of Italian government bonds will further erode confidence in the banking system," Fitch said in a statement.

"In such a scenario, concerns about the banks would start to weigh on the sovereign credit profile and a vicious cycle of deteriorating sovereign and bank credit quality could emerge."

The Bank of England have increase ‘Quantitative Easing’ from the original £200bn to £275bn.

In March 2009 George Osborne warned that the Bank of England’s strategy of quantitative easing is a “leap in the dark”.

George Osborne, the then Shadow Chancellor described the decision to effectively print more money as a “last resort”, necessary because of the “complete failure” of Labour’s other measures to tackle the recession.

He told BBC News, "I don't think anyone should be pleased that we have reached this point. It is an admission of failure and carries considerable risk.”

Yesterday George Osborne said "Well, the Bank of England has made an independent judgement that it's right to commence quantitative easing, and that's their independent judgement; but I agree with it and that's why I authorised quantitative easing to proceed.”

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Vic Farron RFT Express.

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