Economic output in the UK has now been fairly static for about eight months. It is still 4% below 2008.
This makes this slump harsher than any since 1930-4, when output was 5% down a similar time along.
The National Institute of Economic and Social Research reckons it will be 2013 before output is back to 2008 levels.
That prediction assumes no new convulsions. But the Bank of England reports that the prices at which old Greek government bonds is trading imply that international financiers guess an 80% probability of Greece defaulting (i.e. not paying debts when they fall due).
The implied probability of Portugal defaulting is 50%; of Ireland defaulting, 50%; of Spain defaulting, between 30% and 40%.
Robert Peston of the BBC estimates that if all those defaults happen, UK banks will see about half their capital wiped out. It will be worse for them if French and German banks, which hold more south European debt, get so hard hit that they then fail to cover debts they owe to UK banks.
The EU, the IMF, and the European Central Bank are scrabbling to make sure that the blade of Greece's crisis cuts into Greek workers' standards and, as a fallback, EU funds, rather than into the banks; and they may succeed. Or they may not.
Inflation is running at 5.2% (RPI) or 4.5% (CPI). The Bank of England is supposed to calibrate its credit policy by a target of 2% inflation. It dare not do that for fear of crashing the economy again. Continued easy credit from the Bank of England to banks increases the risk of high inflation in coming years.
So much for the Coalition government’s claims to heal the economy. So much for their claim that decent jobs are available and only need “workfare” pressure on the jobless and disabled to fill them.
Government policy will bring, at best, continuing economic depression, and, very possibly, renewed downturn.
Its only merit is one from the point of view of the bankers and bosses: that it is driving down workers’ and social standards so as to enable quicker, easier profits.