THE NEW Tory chancellor of the exchequer, Rishi Sunak, yesterday painted a picture of British capitalism as fundamentally ‘robust’ while the NHS was ‘sound’ – all, he claimed, the result of ten years of Tory austerity cuts.
The only cloud on the horizon was the coronavirus outbreak, a temporary blip he insisted which the Tories would do whatever was necessary to overcome.
Sunak announced a fiscal stimulus package totalling £30 billion to defeat the effects of the coronavirus, which includes £7 billion for businesses and £5 billion for the NHS, although on close inspection only £12 billion will be spent on coronavirus specific measures.
While he spent over an hour making pledges to spend billions on averting an all-out crash, Sunak was careful not to admit that this would double the amount of government borrowing every year by 2024. In other words, the Tories are preparing to unleash a further debt storm by printing money to keep a collapsing UK economy going.
Even before the coronavirus epidemic, official figures showed that UK GDP had flatlined in January with a 1.2% fall in manufacturing output since October last year, pulling the UK’s growth rate down to zero.
Zero growth rate means British capitalism has entered into recession, a recession that will be vastly exacerbated by the coronavirus that has shut down manufacturing supplies and brought the prospect of millions of people being forced to stay at home in self-isolation.
In a clearly co-ordinated move just prior to the Budget speech, an emergency meeting of the Bank of England announced an emergency cut in interest rates from 0.75% to 0.25% – the lowest level in the Bank’s history.
This cut in interest rates is to make loans to businesses even cheaper, encouraging companies and industries to acquire even more debt than the record amounts they already have.
Labour leader Jeremy Corbyn, in his reply, warned that fighting the coronavirus will be ‘much tougher because of the last 10 years of deeply damaging and counter-productive cuts to all of our essential public services. We are going into this crisis with our public services on their knees and, as today’s figures confirm, with a fundamentally weak economy which is now flat-lining with zero growth even before the impact of coronavirus’.
Corbyn pointed out that all Sunak’s boasts about this being the biggest injection of money into the economy and public services was ‘smoke and mirrors’ and that: ‘As a percentage of GDP it only returns us to the levels we had before the Conservatives slashed investment so drastically in 2010.’
As for austerity being over, Corbyn said: ‘According to the Institute for Fiscal Studies, it’d take at least £54bn of current spending this year, excluding health and social care, to get us back to 2010 levels. We’ve heard nothing approaching that scale from the chancellor today. Without it, the IFS says austerity is baked into our economy.’
This budget offers nothing for the working class, who face full-scale closure of factories and plants, except more austerity. It offers nothing to those forced to stay at home except the promise of a measly £94.25 a week in statutory sick pay – and even this will be unavailable to gig workers or the self-employed while the wealthy and businesses are given tax cuts.
Far from being a temporary blip, coronavirus is proving to be a huge nail in the coffin of a capitalist system already on its last legs.
The capitalist system has no weapons in its armoury to stave off recession and collapse, except to carry on printing worthless paper money at a time when the stock markets are crashing and industry is closing down.
The burning issue of the hour is for the working class to use its strength by organising a general strike to bring down the Tories and then go forward to a workers government that will expropriate industry and the banks, and develop a planned socialist economy that will use the the wealth of the country to develop the best-ever healthcare, and living standards for all in a Socialist Republic!
