Several weeks ago came the somewhat surprising news – at least for some – that British GDP fell by half a percent last quarter. This is contrasted against economists’ predictions of growth between 0.2 and 0.6 percent.
In an attempt to quell fears that this heralds another dip back into recession, Tory and Lib-Dem ministers insisted this was largely due to the ‘cold snap’ we experienced in December last year. What nonsense! Surely a minor causal feature, but this drop in productivity is probably more likely connected with the coalition’s reckless austerity program; a program which is worryingly short-term and defensive.
The Socialist Party insists that cutting public services is in no way conducive to economic growth coming out a recession; the government’s messy half-baked plan puts millions of jobs and services in danger. Creation of jobs and investment in our services is what is needed, as a small starting point for a full-scale fight back against capital’s encroachment into our daily lives.
And in more recent news, it seems the bankers and mega-rich have come out on top yet again, in what the coalition has dubbed ‘Project Merlin’; a weak attempt at somehow addressing the popular anger at exorbitant bankers’ bonuses.
Under this new agreement, banks have a target – not at all an obligation – to lend to small business. Yet this lending will be at commercial rates of interests, making it unattainable for many of these small businesses.
Further, the banks actually approached the government for this deal – not, of course, out any kind of altruism – but to gain a deal best suited to their class interests, and due to the pressures of the market and competition. Their aim was to make way for millions of pounds of bonuses again. Bob Diamond said the period of ‘remorse and apology’ following the initial crash ‘needs to be over’.
In addition, the Bank of England is now under even more pressure to act on Britain’s rising inflation which, as announced by the Office for National Statistics (ONS) recently, rose from 5.4% in February, to 6% this month. This is the highest it has been since November 2008.
Mervyn King, the head of the central bank, has warned that fragile growth may be put at risk by quickly lowering rates back down. And the ONS points towards new year’s VAT hike – from 17.5% to 20% – as a contributory factor to the rise. This, on top of raising fuel and general commodity prices, have all contributed to the hike.
In short, we are facing the biggest attack on living standards that has been for 80 years. Regardless of political ideology, governments have been forced to implement austerity and cut-back measures.
Of course, the rationale from the ruling class, that we ‘all must bear the burden’ – or something to that effect – makes no sense considering that working people did not cause the economic crisis. The old adage concerning capital accumulation, ‘the rich get richer whilst the poor get poorer’, is proved no clearer than in a period like this.
£1.5 trillion in financial aid and stimulus packages was used to prop up the banks in the UK. More generally, banks across the world have received bailouts and hand-outs from tax-payers equivalent to a quarter of global GDP. The working people of the world have been made to pay, big-time.
At a much more local level, we are already seeing – along with the cuts to housing, education, healthcare, welfare etc. – thousands of job losses at in councils across the country. The Socialist Party reproaches the opportunist Labour councillors who cry crocodile tears for these cuts; the Lib-Dems who have shamelessly capitulated to the Conservatives; and the Tories who would destroy our services anyway.
A vast movement uniting students, workers, the unemployed must be galvanised into action, as we are seeing already. The fight back must be linked to other struggles nationally, to struggles across Europe, in the Arab world and across the world. We do not just call for a mere reforms to solve these problems; crisis is born out of regulated capitalism as a well as neoliberal. As Trotsky wrote some 70 years ago: we ‘must face reality squarely’ and be ‘bold when the hour of action arrives’.




On Thursday 24th of June the Socialist Party, in alliance with Youth Fight For Jobs, Somerset NUT and the Yeovil Trades Council, successfully held their first ever public meeting in Yeovil. Around 20 attended the meeting in where the main speaker was John McInally, Vice President of the PCS.

