Socialist Worker

EU panics as economy gets worse

Issue No. 2283

The robber barons of Europe have fallen out—but their rows are an expression of a much deeper crisis. They face the prospect of economic catastrophe.

Even the powerful economies of France and Germany are now threatened with credit rating downgrades. This has caused panic across the ruling elite.

Politicians have imposed unelected governments on Italy and Greece. But the strikes there show that people won’t take austerity lying down.

“Fiscal unity”—the drive to centralise the imposition of austerity across Europe—is the latest attempt to make ordinary people pay for a crisis caused by bankers.

David Cameron is keen to spin his rejection of European Union plans as a triumph for Britain. But the nationalist rhetoric masks the real problem.

Britain’s economy is failing. George Osborne proclaimed in his recent autumn statement that Britain would avoid another recession. Just weeks later and his predictions are already in tatters.

The OECD predicts a recession in Britain for the first half of next year. Meanwhile the National Institute of Economic and Social Research estimates a 70 percent risk of a “double dip” recession.

Osborne admitted in his statement that the Office for Budget Responsibility (OBR) had slashed its growth forecasts.

Its projection for 2012 growth has been cut from the 2.5 percent forecast in March to 0.7 percent. This is the fourth OBR growth forecast to be downgraded.

But even this gloomy outlook was based on a big, dubious assumption. That is, as the OBR put it, “the euro area finds a way through the current crisis and that policymakers eventually find a solution that delivers sovereign debt sustainability”. So Britain can only avoid another recession if Europe solves its crisis.

The leaders of Britain, France and Germany have had a row this week. But they are united over the need to impose austerity.

We have to show we are united in stopping their attacks. This year has seen tremendous struggles across Europe and the world against the priorities of the rich and powerful.

On 30 November workers in Britain showed that they too have the power to take on the Tories. If we escalate these struggles and build maximum unity across the working class, this is a fight we can win.

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What We Think
Tue 13 Dec 2011, 17:13 GMT
Issue No. 2283
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