The quarter one GDP figures released today showed the UK economy shrank by 1.9% just two day after Darling had predicted a 3.6% decline for the whole year. This shows how far off the market he was and was generally trying to deceive the mass of the population. This means that the public cuts will have to be much larger than announced in the Budget. The GDP number was much worse than consensus expectations and the UK now has had the largest two successive declines in GDP since the days of Thatcher in 1980.

The UK is on track for a decline of at least 6% in GDP for 2009 with it technically entering a depression sometime in 2010. The Q1 decline shows that the IMF’s prediction of a 4.2% decline for the UK in 2009 is well short of the mark. This has been par for the course for the IMF which has consistently underestimated the scale of the recession.

The news from Germany was even bleaker where Axle Weber the Bundesbank (equivalent of the Bank of England) president said that German GDP shrinkage would be over 3% in Q1. This stands in sharp contrast to a prediction by the IMF of 4.1% for the whole year. Germany is being particularly hard hit by being heavily dependent on exports to the US and the UK.

In the US previously owned homes sales fell in February and half off these were the sales of distressed mortgages and house prices fell 12% in the calendar year. Credit experts KKW have estimated that US banks alone need another $1 Trillion to stay afloat.

Outside of the US, governments will be unable to cover deficits and the cost of bailouts from the issue of government bonds as international investors downgrade the credit worthiness of major economies – Britain is now rated on a par with Portugal and Greece.

This will mean they will have to make massive public sector cuts and raise taxes for the low and middle incomes. This will only deepen the recession and prolong it.

We are all going to pay a very high price for capitalism’ reckless follies.