Bankrupt UK economy plunges deeper into slump


There was no cheer for the British bourgeoisie on Monday when three separate reports from the Institute of Chartered accountants and the accountancy group Ernst and Young, revealed that the economy is entering what is termed a ‘double-dip’ recession.

According to bourgeois economists, an ordinary recession is when the economy experiences two consecutive quarters of a shrinking Gross Domestic Product (GDP) – GDP being defined as the market value of all goods and services produced within a country.

A double-dip recession is deemed to take place when an economy at first appears to have recovered from a recession but then plunges right back in again.

This is what these reports are saying is happening in the UK at the moment, pointing to the crisis facing one million small to medium businesses who are facing the immediate prospect of bankruptcy.

In the last three months of 2011 the UK economy shrank by 0.2%, a slump in production caused by the almost total collapse of manufacturing industry.

This trend is set to continue as the banks pull up the drawbridge and refuse to loan money to industry on the perfectly reasonable grounds, for them, that they will never see their money again.

All of this, of course, makes a complete nonsense of the claims by the Tory-led coalition government that the hundreds of thousands of jobs being slashed in the public sector can be replaced by an expanding jobs market in the private sector.

The entire theory of a ‘double-dip’ recession is misleading – it covers up the fact that every weapon in the arsenal of bourgeois economics has been thrown at the crisis with absolutely no effect.

Indeed, every attempt to pump money into the shattered capitalist economy through quantitative easing has resulted in only very temporary relief followed by an even deeper plunge into slump.

This has not stopped them from continuing with this failed policy, which can only stoke up rampant inflation as worthless paper money floods the economy.

The Bank of England this week is preparing to push a further £50 billion, on top of the £270 billion already artificially created, in its third attempt to ‘kick-start’ the economy.

Looming over all these attempts to breathe life into the bankrupt British capitalist system is the world crisis and in particular the crisis of the eurozone.

With talks between the Greek government and the EU bankers for a further bail-out loan of 130 billion euros to prevent the entire country going bankrupt this month on the verge of breaking down, the prospect for a European-wide banking collapse has moved right to the brink.

The price being demanded by the banks for this loan is yet further cuts in pay and pensions, along with the axing of 150,000 public sector jobs on top of the intolerable cuts already imposed.

The Greek government is now begging the eurozone leaders and banks for concessions out of fear of revolution.

As for the banks, they have made it clear that there will be no concessions and that they demand the Greek working class pay for the crisis in blood, and that they expect the government to force them to pay.

The revolutionary confrontation underway in Greece is not unique.

As these reports amply demonstrate, in Britain there is also no way out for capitalism but to take on the working class and drive the already savage cuts even further.

As in Greece, the issue for the working class here is that the only way forward is the fight to bring down the government through a political general strike and replace it not with the hopeless reformists of the Labour Party but with a workers government that will advance to socialism.