What a mess

Although the effects of the economic crisis might seem bad here in Spain, they are obviously a lot worse in Britain.

Yesterday, in his speech, Alistair Darling, Chancellor of the Exchequer, defended the "extraordinary actions" laid out in his Budget and stood behind the plan to raise high earners' tax to 50 per cent as well as his forecast that the UK would recover from recession by the end of the year.

The Chancellor acknowledged that the move to increase the tax rate for people earning more than £150,000 a year from 40 per cent to 50 per cent was "extraordinary" but said: "These are, I'm afraid, extraordinary times."

The Chancellor also announced that the highest earners will lose valuable tax breaks on pension savings, as part of a package of measures that will see the tax grab from high earners raising up to £5.5 billion a year - an average of £18,333 annually per person.

The surprise new measures - which mean Britain will have the highest top rate of any major economy in the developed world - came as Mr Darling was forced to lay bare the true extent of Britain's levels of borrowing in his Budget.

In the worst economic forecast since the Second World War, he said he planned to borrow another £700 billion over the next five years, taking the national debt to £1.4 trillion.

Darling forecast that GDP would shrink by 3.5 per cent this year — the worst contraction since 1946 — but would grow by 1.25 per cent during 2010.

However, the International Monetary Fund (IMF) predicts that the UK will remain in recession during 2010, when it expects GDP to shrink by 0.4 per cent and that the downturn over this year will be worse than the Chancellor's prediction, with the economy set to contract by 4.1 per cent.

I guess that means we won't be getting the 1.3 euros to the pound that some were predicting any time soon