There was little right about the UK Budget last Wednesday, but much that was wrong.

Chancellor of the Exchequer, Alistair Darling’s Budget speech supposed the economy would power back to higher than trend growth within a year or two, following an underestimated slump of -3.5pc this year. GDP will apparently oblige by growing at a boomtime rate of 3.5pc in 2011 and then ease back to trend at 2.75pc.

The IMF was quick to stamp all over the Budget predictions of growth, while most commentators rubbished the entire exercise as electioneering and “queering” the Tories pitch.

Public borrowing for this year and next is set to rise to £175 billion and £173bn — the highest in history and more than all years added together since 1694.

The Prime Minister and Chancellor clearly don’t believe they will be around to pick up the mess when all this fiction hits the fan.

There was almost a demob-happy mood in the PM’s demeanour as he laughed and chatterered through proceedings.

It does not bode well.

With the U.S. now firmly in recession, Syntagma looks at the causes of this spectacular downturn and speculates that the Iraq war may have a lot to do with it.

“The American economy is now in recession. A slew of new data clearly reveals both a marked downturn in activity, combined with a rise in inflation — something not seen since the stubborn “stagflation” period of the 1970s. Some economists expect a robust return to growth later in the year off the backs of aggressive rate cuts by the Fed…”

Read the article here.

In another piece today, our sister site examines banks’ attitude to risk and how securitization let the side down, handing huge advantages to authoritarian Asian regimes.

“In the old days, banks took the risk of lending money on themselves and ensured that borrowers would be able to pay it back over time. Securitization means that they can lend to any Tom, Dick or Harriet, package up the debts into large parcels of small slices from many borrowers, and sell them onto other banks and finance houses.”

Read the article here.

Is a worldwide recession already underway?

The Chief Economist of U.S invesment bank Merrill Lynch believes so. According to his analysis America is now into the first month of a recession, defined as two successive months of negative growth.

Other commentators think it could be longer than that, while some, like Irwin Steltzer, speaking on the BBC’s Newsnight, believes sovereign wealth funds will allow the banks to re-establish their balance sheets and avoid a banking crisis.

For an analysis of the coming recession on both sides of the Atlantic see John Evans’s article in Syntagma.

He writes, “All banks are now hoarding cash like Ebeneezer Scrooge on a bad day and virtually ceasing to lend. With house price indices slithering down a slope like novice ice skaters, and inter-bank rates running at around 8 percent, this has become a total banking crisis worldwide, and that has the potential for real evil in our economies.”

Read the article here.

We will shortly publish an updated piece on how to avoid the worst effects of a recession in your personal finances.

British people were told yesterday that the personal data of nearly half the nation has “gone missing”. In the newly merged department of Inland Revenue and Customs, a “junior official” downloaded the personal details, including bank account data and National Insurance numbers, of 25 million people and placed all of it on two unencrypted CDs.

The official then put the CDs in an envelope and posted it. The package wasn’t even registered so couldn’t be tracked or traced. It’s now officially “lost in the post”.

Alternatively, it may have been stolen to order by organized crime. We have been told, the official is now under guard in a “safe house” to protect him or her against the media, and presumably criminals seeking “to make him an offer he can’t refuse”.

This morning there’s huge panic all over the UK as people wake to find their bank accounts and personal identities compromised in the most dangerous way possible.

Once again we see the perils of allowing a central administration to accumulate vast quantities of information through a system of universal benefits more in tune with the Soviet era than the distributed nature of data in the age of the internet.

What can you do to protect yourself against the kind of scam everyone in the UK is now worried about?

1. Check your bank and credit card statements for the next 5 to 10 years. Criminals can lie low and strike when banks get sloppy again.

2. Change your online banking password, especially if you use family data as a memorable word.

3. Look at your credit report. The information in the Child Benefit Agency records is enough for a criminal to apply for loans, credit cards and even mortgages in your name, as well as other forms of credit such as mobile telephone and catalogue accounts. Your credit report lists all your credit commitments and recent applications for credit, so you can instantly see if someone has been trying to use your ID.

Apart from that, you are at the mercy of Government officials and your bank’s security measures. Ultimately, they must take responsibility for protecting their customer’s data.

Unfortunately, British Government agencies routinely break its own Data Protection Act. The shambles goes on.