THE Governor of the Bank of England, Andrew Bailey, warned on Tuesday that the unprovoked, illegal war on Iran by the US is having a devastating effect on the weak UK economy.
Bailey told the Treasury select committee meeting that the economic effects of the failed war and the closure of the vital Strait of Hormuz was starting to impact on the lives of the working class and the middle class.
Britain’s homeowners have been hit by the biggest increase in mortgage rates, more than any other country in the G7 list of advanced economies.
Bailey told MPs that with the possible exception of Japan, the UK has seen ‘the highest increase in mortgage rates in the G7’ before adding: ‘Obviously that will affect individual families.’
A household with a £250,000 mortgage will be paying around £1,565 a month if they take out a fixed rate 25 year mortgage today. This is £110 a month more than they would have paid if they fixed in at the cheaper rates available in February, before the US-Israeli attack on Iran on February 28.
Bailey blamed the war on Iran for this massive increase in inflation saying: ‘The conflict is still going on. It is also causing a high level of energy prices and also quite a bit of volatility in these energy prices.’
He continued: ‘That volatility is feeding through to financial markets, and nearly all of that volatility you can trace back to events in the Gulf.’
Bailey warned: ‘We have got higher energy prices. They could be higher still. The Strait remains closed.’
The price of oil topped $100 a barrel after a steady increase from $80 a barrel over the past week as the oil markets become ‘immune’ to US president Trump’s frequent claims that the US has reopened the Strait and defeated Iran.
US imperialism has suffered a terminal blow delivered to it by the Iranian people who have exploded the myth that the US had economic mastery that was enforced by its military.
This defeat has accelerated the collapse of capitalism internationally, driving an inflationary spiral that is hitting workers and youth in Britain and across the world.
In the UK, the Food and Drink Federation (FDF), the trade association for food retailers, issued a warning that shoppers face a prolonged surge in food prices driven by high energy costs.
The FDF predicts that by next year, a weekly food shop that would have cost £100 in 2020 will cost £150, adding intolerable pressure on the millions of working class families already suffering from sky high cost-of-living expenses and soaring energy costs.
The FDF further warns that unlike previous spikes in food prices they predict the record levels of energy costs compounded by extreme weather conditions that have caused a crisis in the farming community means that food prices will rise increasingly into the next year.
Last month TUC general secretary Paul Nowak commentated on the inflationary crisis by urging the Burnham government to ‘take action’ to support households.
The working class must now take its own class action and remove the Labour government that is committed to obeying the instructions of the bond markets and capitalist class, and bring in a workers government and socialism.
The working class will not allow itself to be driven back to the days of abject poverty by a capitalist system that has reached the end of the road, from which it can only attempt to escape by waging war abroad and a class war against the working class at home to impose its economic collapse onto their backs.
The only demand that can resolve the crisis is to force the TUC at its annual conference next Sunday to immediately call a general strike to bring down the Burnham government and replace it with a workers government.
A workers government will expropriate the bosses and bankers, placing the banks and major industries under the ownership of the working class by building a socialist planned economy.
Join the lobby of the TUC on Sunday – join the WRP and Young Socialist to build up the revolutionary party necessary to lead the British socialist revolution to its victory.
There is no time to lose!
