Tuesday, January 20, 2009

Warning that UK is on brink of depression

Britain is facing an economic depression, one of Scotland's most prominent businessmen has warned, as the government prepares to announce its last-ditch attempt to shore up confidence in the banking industry.

Sir George Mathewson, a former chairman of the Royal Bank of Scotland and chairman of the Scottish Government's economic advisory council, said that economic conditions would worsen.

He also attacked Gordon Brown and Labour for their key policy moves during the crisis: the VAT cut, recapitalisation of the banks and the £20 billion guarantees of loans to small business.

In his bleak assessment, Sir George said: "Right now it's depression we should be really worried about because that causes real, personal suffering for a lot of people."

Asked if this was a real risk, he said: "Oh yeah, of course it is."

He also warned that injecting more capital into banks would not revive the economy.

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