Mervyn King, the governor of the Bank of England, admitted last week that Britain is probably now in recession. It joins a long list of economies which are now experiencing a downturn, including the US, Japan and the European Union.
In Britain there are forecasts that unemployment will hit the three million mark by 2010.
The Crisis charity has found that a third of adults they surveyed would lose their homes if they were jobless for more than three months.
Job losses are mounting across the globe. The damage to ordinary people in Africa, Asia and Latin America, already hit hard by decades of debt repayment and International Monetary Fund (IMF) austerity programmes will be massive.
The leaders of the world’s top 20 economies met in Washington last weekend, wined and dined, and left having resolved that the best way to deal with the economic devastation was through the IMF.
But this will only increase the problems for countries hit by the crisis. Pakistan became the latest country to apply for an IMF loan last week.
The price for that loan is a forced end to fuel and energy subsidies, reductions in public spending, a tax on food and other austerity measures.
Yet two thirds of Pakistan’s population already have to survive on $2 or less a day. Turkey is also negotiating with the IMF, which is demanding cuts in government spending in return for a loan.
Commentators have warned that the world economy faces two dangers – either a 1930s style slump, or deflation with zero or low growth, which Japan experienced for a decade and a half from the early 1990s.
But Japan’s manufacturing industries could sell to North America and Europe at the time. It also hitched its fortunes to the growing Chinese economy, helping it to escape recession, though only for a short time.
With major economies in recession and with Chinese growth rates falling as its export markets dry up, the danger looms of a major global recession. Britain is one of the world’s most exposed economies.
That is a consequence of three decades of free market policies that put finance at the heart of the economy.
Workers need to say, locally and globally, that we will not pay for a crisis we did not create and we will fight to put people’s needs before the drive to revive profits.
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