It's the 80's All over again. UK now included in World Credit Crunch

The economy is in a "very bad" state, incoming business minister Peter Mandelson said in a broadcast interview on Sunday. The former EU trade commissioner compared the state of the economy to an illness and said the government would have to "stabilise the patient... treat the symptoms... (and) restore the patient to health." Asked how he would describe the economy, Mandelson said: "I think it's very bad indeed." "We are suffering, and we're not the only ones by any means to suffer from the fallout" from the global credit crunch, he told Sky News.

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He levelled the blame for the international financial crisis at the United States, arguing that "none of the problems we have now would have been triggered without what happened on Wall Street and in the US financial system." Mandelson added that a meeting in Paris on Saturday of the leaders of Britain, France, Germany and Italy, the European Commission and the chairman of the eurozone grouping of finance ministers, was "the beginning... of quite a few meetings at that level before we see our way through this crisis."

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He also argued that the government would "have to keep a very steady nerve and a very steady hand and not rush to immediate conclusions about what we can do. "That doesn't mean to say that we pause so long that we allow the situation to run away with us -- the government has already demonstrated that it is not going to do that -- but we have to work with others."


Britain announced last week that it would nationalise mortgage lender Bradford & Bingley, months after it was forced to nationalise another such bank, Northern Rock, which both fell victim to the global credit crunch. The economy as a whole has also ground to a halt -- official data last month showed British gross domestic product experienced zero growth in the second quarter compared to the first three months of 2008.

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That performance was the weakest for 16 years, while the Organization for Economic Co-operation and Development forecast in September that Britain faced a recession, defined as "two consecutive quarters of negative economic growth," this year. andelson's return to the cabinet, announced on Friday, has sparked surprise and words of warning for Prime Minister Gordon Brown.


Indeed, Mandelson himself has spoken of how he did not expect to be asked to serve in the cabinet, after twice having been forced to resign from ministerial posts under Brown's predecessor Tony Blair. Brown and Mandelson, who is no longer an MP and will thus have to be appointed to the House of Lords so that he can join the government, fell out in 1994 when the latter backed Blair for the post of Labour leader.