Gordon Brown is hit by fresh doubts over UK plc as exports crash

Published on Tuesday 9 March 2010 21:50

GORDON Brown's strategy to drag Britain out of the current economic crisis is "not credible", it was claimed yesterday as new figures revealed a dramatic increase in the trade gap and serious doubts about the country's credit rating.

• Prime Minister Gordon Brown, here with Home Secretary Alan Johnson, came under fire yesterday for poor economic policies. Picture: PA

New data revealed UK exports suffered their biggest fall in more than three years in January, plunging 1.4 billion, or 6.9 per cent.

The overall decline far outstripped a 1.6 per cent decline in imports, leaving the UK's goods trade gap with the rest of the world widening from 7bn to 8bn in January.

The government figures saw confidence fall away from the UK economy, with the pound dropping below $1.50 and 1.10.

The news was a significant blow to the government's hope that a drop in the value of sterling last year would help Britain to an export-driven recovery.

The news came as the Prime Minister prepares to make a major speech on the economy today in which he is expected to confirm a date for the Budget.

However, Chancellor Alistair Darling's hopes for some Budget "election giveaways" were hit as international credit rating agency Fitch raised serious concerns about Britain's triple-A status.

Brian Coulton, Fitch's head of Europe, Middle East and Africa sovereign ratings, told a conference in London that the UK needed stronger fiscal adjustment, adding that the rating agency was "uncomfortable with the fiscal adjustment path set out by UK authorities".

And he said that the government's target for reducing the deficit was "frankly too slow".

If Britain loses its triple-A status, there is a threat that domestic policy and spending could then be driven by its creditors rather than the government, and the cost of government borrowing could rise dramatically, sparking massive cuts in services and tax rises as well as an increase in the cost of personal borrowing in Britain.

The Conservatives said the issue of the credit rating and export failure showed Mr Brown did "not have a credible strategy". They claimed he needs to focus instead on the UK's debt of more than 1 trillion, which they believe is holding the economy back.

Shadow chancellor George Osborne said: "The red light is flashing over the British economy and we have a choice: action with the Conservatives to secure the recovery or more dither and delay with Gordon Brown that puts our economy at risk."

Shadow business secretary Ken Clarke described the trade gap figures as "disappointing" and said a new economic model was needed for the UK. He said: "We need to build a new economic model based on saving, investment and exports instead of the debt-fuelled model of the last decade."

He also said more than 140,000 manufacturing jobs had been l ost in Scotland alone since 1997, when Labour came to power, arguing that this was one of the reasons for Britain's poor export figures.

But Labour hit back, claiming that Mr Clarke had made "a major gaffe" about Scotland.

Labour MP Frank Roy, a former steelworker, said: "Ken Clarke's comments today are a major gaffe and insult to many workers in Scotland, who have not forgotten what the Tories did to Scotland.

"Last time Mr Clarke had something to say about Scottish manufacturing, it was to close down Ravenscraig (steelworks]."

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