Britain’s economy is sinking into its deepest recession for 70 years, writes Sadie Robinson
Figures released last week underlined that the Tories’ austerity policies are pushing Britain’s economy deeper into recession.
For workers this opens up the prospect of ever more savage attacks on jobs, pay, pensions, benefits and services.
Britain’s economic output shrank by 0.7 percent in the second quarter of this year, according to the Office for National Statistics.
Britain has been in recession—where economic output shrinks—for nine months in a row. This is the longest period of recession since the Second World War.
Now credit rating agencies are threatening to downgrade Britain’s rating. If that were to happen, then the British government’s costs of borrowing would soar, intensifying the crisis.
The Tories have blamed the crisis on the jubilee holiday, the weather and Gordon Brown. Chancellor George Osborne has blamed the crisis in Europe.
It’s true that Britain isn’t immune to the crisis in Europe. But Britain is now the worst performing economy in the G8 club of rich nations, except Italy.
The real problem is that the economy is dominated by a small class of rich people who are refusing to part with their cash.
The Tories keep throwing money at the banks and bosses to “persuade” them to lend and invest. But they are sitting on the money because they aren’t confident of making enough profits.
Now sections of the ruling class are putting Osborne under pressure to shift away from austerity and towards spending.
The bosses’ CBI called on George Osborne to spend some£250 billion on major infrastructure projects, knowing that this would hand lucrative contracts to private firms.
But while Osborne’s cuts are making the crisis worse, its origins are much deeper than that. Crisis is built into a system that is driven by competing bosses always looking to make more money.
Osborne says we have to make cuts to repay Britain’s budget deficit. If he really wanted to do that he could clamp down on bosses’ tax evasion and tax the rich. But he won’t do that—because his real aim is to transfer yet more money from the poor to the rich.
The mainstream debate on how to boost “the economy” is really about how to boost bosses. And politicians from all parties want to protect bosses’ profits at our expense.
Replacing Osborne with Lib Dem Vince Cable, as some are suggesting, is no solution for workers. Nor is making cuts at a slower pace, as Labour advocates.
The real problem is the tiny minority of very wealthy people who run the system. And the real solution is to get rid of them.
Tory trade minister Lord Green has denied he has a “case to answer” about money laundering at HSBC bank.
He was the chief executive and then chairman of the bank while the money laundering was taking place. The question is, what did he know, and when?
The bank has admitted moving billions of dollars in cash from its Mexican arm despite warnings it could be drug money. A US Senate report called the bank’s culture “pervasively polluted”.
Green attended a private dinner party with HSBC tops weeks before the accusations came to light. He has refused to comment on this, saying it was “private”. And he has refused to answer any other questions about the affair.
HSBC bank has put aside £445 million for fines it may face for allowing billions of pounds of laundered money to through the financial system. And HSBC chief executive Stuart Gulliver admitted the final fine could be “higher, possibly significantly higher”.
The bank is also involved in the Libor rate-rigging scandal. But even a huge fine or two will hardly make a dent in the bank’s cash mountains. It reported a rise in profits this week to £8 billion. Meanwhile it is cutting 30,000 jobs.
The £3 billion of cuts to tax credits that came into effect this April is a likely factor behind the economy shrinking 0.7 percent, a campaign group says.
The Child Poverty Action Group says that the poorest households spend their money straight away, putting it back into the economy. This means that cuts are not only causing them suffering but also hitting the overall economy.
The £3 billion cuts includes £550 million snatched away from couples who work fewer than 24 hours a week part-time. And £1.4 billion of it was taken from the parts of tax credits paid to people who have children.
£3 billion cut from tax credits in April of this year
£3,870 lost by households earning under £17,000
850,000 households affected by the cut