Should We Be Braced for Repeat of 1930s? Doomsayers Paint Bleak Economic Picture with Fears We Are Heading for Another Great Depression

Article excerpt

Byline: Peter Collins

THEY have been called the "Doomsayers" - a group of economic experts around the world who fear we could be on the brink of another Great Depression.

Europe is in disarray, stock markets are plunging, the banks are in crisis, and the UK and US are in deep economic trouble.

As it was in the Great Depression of the 1930s they say, so it is now.

But so much has changed since the world was plunged into economic crisis between the world wars that direct comparisons between the 1930s and now are erroneous.

Few doubt, however, that Britain is on the verge of the worst economic crisis since the Great Depression and, as in the 1930s, Wales is likely to feel the full force of the downturn.

He's not listed as one of the "doomsayers", but Ed Balls, shadow chancellor, is not exactly optimistic.

In 2009, when he was schools secretary, he said: "The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years, as it will turn out.

"I think this is a financial crisis more extreme and more serious than that of the 1930s, and we all remember how the politics of that era were shaped by the economy."

If anything, the situation has got worse since then.

Some economists have raised the spectre of an outright economic depression, often defined by experts as a peak-to-trough economic contraction of 10%.

Aside from the demobilisation periods following World Wars I and II, this kind of contraction has never taken place - not even in the 1930s' Great Depression.

Welsh professor Brian Morgan, of UWIC, is not a "doomsayer".

He said: "I don't think we are on the verge of a Great Depression.

Automatic stabilisers in the economy, which were not there in the 1930s, mean we aren't going in that direction.

"But we could be looking at decade-long zero growth as we saw in Japan in 1991.

"That is much more likely to happen. We will be bumping along with Europe and the US with very low growth for at least five years."

One of the abiding images of the Great Depression was long queues of unemployed people, in America and closer to home here in Cardiff.

Again, there is no comparison between then and now. During the Great Slump, the South Wales Valleys, then a centre of the coal mining and steel industries, was devastated by the depression where towns such as Merthyr Tydfil and Swansea had unemployment rates reaching above 25% at certain times.

Today Wales, which is no longer a centre of coal mining and steel and relies instead on public and service sector jobs, has the highest unemploy-ment rate in the UK, but it is "only" 8%. …