UK economy in crisis: Make the bosses pay!

Outlining the government’s latest spending plans on November 25, Rishi Sunak announced a wave of new austerity measures, including attacks on wages and welfare. The labour movement must fight for a bold socialist alternative.

With a COVID vaccine on the horizon, the establishment media is desperately trying to reassure us that our lives will soon get back to ‘normal’. But beneath these soothing words is the reality that the British economy is shattered, and therefore any return to ‘normality’ is ruled out.

The truth was laid bare by Tory Chancellor Rishi Sunak in yesterday’s spending review, where he admitted that “the economic emergency has only just begun”.

Sunak went on to demolish Boris Johnson’s earlier claim that there would be “no return to austerity”, by announcing a public sector wage freeze (i.e. real wage cut) for millions of workers. Likewise, he refused to extend the £20-a-week uplift to Universal Credit, leaving six million more than £1,000 worse off a year.

Overall, Sunak and the Tories plan to cut £12.9bn from the every-day public spending budget over the next four years, and £3.3bn from capital spending budgets. So much for “no return” to austerity – the fact is, austerity never ended.

Crisis

All the signs are indicating that things are about to get much worse, not better / Image: Socialist Appeal

According to the Office for National Statistics, Britain’s GDP rebounded by 15.5% in the third quarter of this year. Normally, such a rate of growth would be considered spectacular. Yet rather than celebrating, serious capitalists have been sounding the alarm.

And rightly so. The Office for Budget Responsibility (OBR) is predicting that GDP will collapse by 11.3% overall this year. This is the largest fall for over 300 years – even greater than the dark years of the Great Depression in the 1930s.

Should the UK fail to reach a trade deal with the EU, the OBR predicts an additional 2% hit to GDP.

The years ahead are looking bleak indeed. The OBR is predicting that economic output will not return to pre-pandemic levels until the fourth quarter of 2022. In reality, it is likely that the crisis will be even more drawn out.

All the signs are indicating that things are about to get much worse, not better. Unemployment, for example, has surged to 4.8% in recent months. But this is predicted by the Bank of England to rise to 7.8% next year. Already, between July and September, a record 314,000 people were made redundant, as the furlough scheme was tapered.

Sunak’s response to this is to allocate funding to a ‘Restart Programme’, to help people “find new work”. No need to worry about paying the bills then – the Tories will help you look for jobs that no longer exist!

Us and them

In order to protect profits, company bosses have been busy cutting their costs by slashing jobs. Since the start of the pandemic, over 782,000 workers have been cut from payrolls, and the total number of hours being worked is down by a tenth.

But whilst cutting their workers adrift with one hand, bosses have been generously rewarding their shareholders with the other.

Sainsburys, for example, is expected to cut 3,500 jobs and close 420 Argos stores. At the same time, they have just paid £232 million in dividends to their shareholders. Conveniently, this is almost the same amount of money they have claimed in business rates relief from the Tory government!

Supermarkets received a collective handout of £1.9bn through business rate relief over the last 12 months.

Sainsbury’s,Tesco & Morrison’s will pay dividends out exceeding £1.3bn.

Sainsbury’s are closing Argos & instore counters with the loss of 3,500 jobs.

Wealth tax anyone?

— Howard Beckett (@BeckettUnite) November 16, 2020

So bleak is the outlook that the BoE has increased its ‘quantitative easing’ (in effect, the printing of money) by £150bn this year in order to ‘prop up the economy’. However, as we’ve seen over the last decade, the only thing that this desperate measure will prop up is the fortunes of the rich. The rest of us, meanwhile, will be made to foot the bill for capitalism’s crises.

Debts

Government borrowing is predicted to reach £394 billion this year, equivalent to 19% of GDP. This is a record level for peacetime, and will take the overall public debt to an eye watering 92% of GDP.

But the capitalist class has made it clear that there is no such thing as a free lunch. Sooner or later, this debt must be repaid. The question is: by whom?

In his spending review, Rishi Sunak noted that overall debt would continue to rise over the next few years. But he warned that “the situation is clearly unsustainable over the medium term”. In other words, he wants workers to prepare to tighten their belts.

As we know from experience, it will not be the billionaires that pick up the bill from this crisis. Rather, the full burden will be placed on the working class and the poorest in society.

Already we have seen the bankruptcy of Croydon Council in London. Instead of waging a fightback, the Labour controlled council is preparing to make massive cuts, scrapping all but the most basic, legally required, services.

The case of Croydon is just the tip of the iceberg. Local authority funding and revenues have dried up everywhere.

The situation is no better in the private sector, as more than half a million companies are in “significant financial distress” and facing bankruptcy. The bosses are already waging an offensive to restore profitability. This will be magnified several-fold over the coming period.

Fight back

The labour movement must organise to meet these attacks head on. Any idea of ‘class peace’ in these conditions is a fantasy. The trade unions must be put on a war footing, to organise militant action in defence of jobs and conditions.

It is clear that there is no way out for the working class under capitalism. The rotten capitalist system can no longer offer reforms, but only counter-reforms; further attacks and austerity. At the same time, the super-rich are getting even richer.

The only genuine alternative, therefore, is to organise and take power out of the hands of these big business parasites – and to put the economy under the democratic ownership and control of the working class.

It is therefore vital that the left in the Labour Party fight back in the civil war being waged by ‘Sir’ Keir Starmer and the right wing. At stake is whether the party is transformed into a safe pair of hands for the capitalists, or into a fighting working-class organisation that can lead workers and youth in the struggle for socialism.