THE INTERNATIONAL Monetary Fund (IMF) has issued a dire warning to Labour Chancellor Rachel Reeves that she must take ‘unpopular’ decisions to halt British capitalism crashing into bankruptcy.
The unpopular decisions the IMF is demanding Reeves takes amount to the complete destruction of the very foundation of the NHS, ending the triple lock on state pensions and driving up taxes for workers.
In its annual report on the UK economy issued last Friday, the IMF warned the Labour government that: ‘Unless the authorities revisit their commitment not to increase taxes on “working people”, further spending prioritisation will be required to align better the scope of public services with available resources.’
In plain language, the IMF is telling Reeves and the Labour government that unless it makes savage cuts to workers’ wages through increased taxes, heaps more misery on pensioners by ending the triple-lock and starts charging for treatment on the NHS and other social services, then the UK economy will be unable to afford repaying the ballooning national debt.
‘Access to public services could also depend more on an individual’s capacity to pay, with charges levied on higher income users, such as co-payments for health services, while shielding the vulnerable.’
This is an attack on the foundation of the NHS as a free at the point of use health service, replacing it with a two-tier service in what is, in effect, a return to the days before the NHS was established and the wealthy paid for the best treatment while the working class were left in the cold.
The IMF report was published on Friday but it was written weeks before.
This means that while it praised Reeves for pushing through welfare ‘reforms’ in the shape of massive cuts to the disability benefits it failed to register the humiliating climbdown by Starmer who faced defeat at the hands of MPs opposing these cuts.
The IMF and the international bankers saw in the Starmer Labour government a compliant tool to drive through the savage austerity cuts and destruction of the Welfare State they insist is the only way to stop the UK being strangled by a debt ‘doom loop’.
The refusal of the working class to accept being made to pay for the capitalist crisis and rebelling against the Labour government has shocked the capitalist financial markets.
Yesterday, the Daily Telegraph reported that Ray Dalio, hailed as one of the world’s ‘most influential hedge fund managers’, has issued his own stark warning that Britain is stuck in a ‘debt doom loop’ of increasing national debt, higher taxes and slow growth.
Echoing the IMF, Dalio insisted that fixing the UK debt crisis means ‘difficult choices are going to have to be made’.
The one choice that Dalio warns Reeves not to contemplate is a ‘wealth tax’ on the super rich which, he maintains, would just lead to them fleeing the country for tax havens abroad.
Wealth tax has become popular amongst ‘left’ Labour MPs as an alternative to Starmer’s all-out war on the Welfare State and benefits.
It is seen by these lefts as a panacea to convince the working class that with a few reforms capitalism can be made to work, and that the pain of economic collapse can be shared between workers and the capitalist class.
The capitalist class has no intention of sharing the pain as British capitalism dives into bankruptcy, strangled by a national debt of over £3.1 trillion and growing at the rate of £5,170 a second!
Dalio and his fellow hedge fund managers, who buy up UK bonds as an investment and live off the profits from interest charged on this debt, are now scared that Starmer’s government is facing a rebellious working class not prepared to be driven into the gutter in order to keep the hedge funds and banks from going bust.
There is no escape from the ‘doom loop’ encircling the capitalist system, the only way to resolve this crisis is for the powerful working class to cut through the loop by taking power through socialist revolution.