Labour chancellor John Healey will face ‘tough decisions’ in his first budget due next month, according to Emma Reynolds, the Chief Secretary to the Treasury.
Reynolds was responding to the latest figures from the Office for National Statistics (ONS) which showed that the difference between how much the government obtains through taxation and the amount it is required to spend jumped to £18.3 billion last month – £3.5 billion more than expected.
The government was forced to borrow £18.3 billion in August – £2.9 billion more than it borrowed in August last year – in order to balance the UK’s books.
With the UK’s national debt pushing the £3 trillion mark and the private financial institutions and hedge funds, who buy up government debt, demanding higher rates of interest from a ‘risky’ British economy, Healey is undoubtedly facing ‘tough decisions’.
Chris Beauchamp, chief market analyst at IG, said that the bond market is turning the screws on the Labour government.
He said: ‘The PM and Chancellor will be feeling quite claustrophobic today as the walls close in around them. Borrowing costs keep climbing, while borrowing itself outpaces the teeny rise in tax receipts.’
Beauchamp added: ‘Everyone can diagnose the problem, but it’s far from clear that a PM who swept to power promising good things for all is capable of holding a fractious Labour Party together to carry out the tough work needed.’
The ‘walls’ of a massive national debt are indeed rapidly closing in on the Burnham government, which faces a working class that has demonstrated it will not make the sacrifices demanded to keep bankrupt British capitalism from crashing.
The ‘tough work’ being demanded by the capitalist financiers and bankers is for the national debt to be cut by slashing the Welfare bill, along with tax increases, and forcing the powerful working class to accept savage austerity cuts to rescue a capitalist system drowning in debt.
While Healey is sitting in Whitehall contemplating this fiscal meltdown, PM Burnham is in New York for a meeting of the UN General Assembly and an audience with US president Donald Trump.
He will be pleading with Trump to end the war with Iran as soon as possible.
Burnham makes his plea as the unprovoked war rebounds dramatically across the world – hitting the UK economy particularly severely as oil prices drive inflation.
A report in yesterday’s Financial Times (FT) highlighted the dramatic effect of the war in an article revealing: ‘Mortgages “on the front line” as Iran war deals £840 blow to homeowners.’
The FT says that UK homeowners are ‘paying an average of £840 a year more’ as borrowing costs, triggered by the war on Iran, ‘start to impact consumers’ spending power.’
Trump, of course, doesn’t care for the plight of British homeowners or workers, just as he doesn’t care about the American working class, which is being hit with rocketing inflation while the US government spends hundreds of billions on weapons to wage a lost war against Iran and faces a national debt of over $40 trillion.
Trump has his own problems, namely an American working class that overwhelmingly opposes the war on Iran and is increasingly rising up against his administration.
The walls are closing in across the entire capitalist world and the working class has the power to resolve this crisis.
The burning issue today is for the working class in the US, UK, Europe and across the world to take action by calling mass strikes to bring down their capitalist governments and replace them with workers governments and socialism.
The time is ripe for the working class to resolve this crisis by rising up and smashing capitalism, putting an end to imperialist wars and dumping imperialism in the dustbin of history where it belongs.
Join the WRP and Young Socialists – build sections of the International Committee of the Fourth International to provide the leadership necessary for the victory of the world socialist revolution.
This is the way forward.
