THE UK’s public sector net deficit for October reached £11.4bn and is the highest monthly deficit since records began.
The national debt at £829.7bn is now running at 59.2 per cent of the country’s gross Domestic Product (GDP). At the end of October 2008 the national debt was at £695.1bn, that is 48.6 per cent of GDP. There has been a leap of £134bn of debt in just 12 months.
To add insult to injury, the Bank of England pointed out that the flow of bank lending to British businesses contracted for an eighth consecutive month as the banks just pocketed £143 billion of taxpayers’ money in the last year.
However, the Brown government sought to put a brave face on this debt disaster for British capitalism by stating that the figures were still broadly in line with its forecasts for borrowing to hit £175 billion this year.
Even bourgeois economists pointed out that with five months of the financial year left to run, there remains considerable uncertainty about the final debt outcome, which most ‘experts’ estimate will be between £200bn and £250bn.
With unemployment still rising rapidly, government tax revenues continue to fall, while expenditure on the Job Seekers Allowance and other benefits is rising in inverse proportion.
The last unemployment figures show that there are 2.46 million people looking for work in the UK, and that the number of young people unemployed between 16 and 24 will shortly reach one million.
The debt situation is now so dire that the Bank of England Monetary Policy Committee, in its meeting earlier this month, while remaining united on not raising interest rates, divided over the question of increasing the money supply.
One of the Committee members voted to increase the monetary easement cash by £40bn, another, Spencer Dale, the Bank’s chief economist, voted against any extension, arguing that any extension might push inflation higher, and beyond the 2 per cent target. The remaining members voted to increase the money supply to the banks by £25bn.
Last Tuesday official figures showed that inflation had risen to 1.5 per cent, with the likelihood of it reaching 3.0 per cent in the New Year, after VAT is restored from 15 per cent to 17.5 per cent. There are other huge inflationary pressures at work, especially the ever rising oil price, now at $80 a barrel and ready to rocket upwards at the first sign of a renewed Middle East crisis.
As well, gold is now selling at over 1100 dollars an ounce as the capitalist class seeks real value.
The OECD has now stepped in to tell Chancellor Darling the obvious, that any attempt at a general election give away will see the UK economy collapse.
The chancellor is now putting his finishing touches to his pre-budget report, due on December 9.
The Paris-based OECD insisted that ‘the weak fiscal position leaves little room for additional stimulus’, and urged Darling to announce ‘concrete and comprehensive consolidation plans’ to tackle the colossal indebtedness.
While exhorting the chancellor to cut the debt, the OECD warned that spending cuts and tax rises would keep Britain in slump for years.
It is no secret that the working class and the bulk of the middle class are going to be made to pay for this crisis by the bosses and their government.
The working class must have a programme for dealing with this crisis.
The trade unions must refuse to accept any wage cuts or job cuts, and must respond to these with a general strike to bring down the Brown government and to bring in a workers government to carry out socialist policies and bring in socialism.
The only solution for the capitalist crisis is to give capitalism an early grave.
