Yesterday, UK borrowing costs hit the highest level since the 2008 international banking crash as the bond market continued to sell off government bonds in the UK and across the world.
The dramatic increase in borrowing costs, the interest charged governments by the owners of the UK’s national debt of over £3 trillion, has been driven by the escalation by the US of the war against Iran.
Joel Kruger, market strategist at LMAX Group, said that the sharp increase in oil prices as a result of the recent US attacks is forcing up the cost of borrowing.
Kruger said: ‘The dominant theme as markets open is the renewed escalation between the US and Iran.’
Jim Reid, an analyst at Deutsche Bank, said: ‘As meteorological autumn began yesterday, a chill swept through markets as rising geopolitical risk, oil prices and bond yields created a risky off start to September.’
He added: ‘The fresh catalyst for the sell-off over the last 24 hours was the jump in energy prices.’
The ‘chill’ wind sweeping through the international money markets is an uncontrollable tsunami for Andy Burnham and the Labour government in the UK that will sweep capitalism into complete bankruptcy and collapse.
The UK is being hit the hardest due to the fact that it has the highest borrowing costs more than any other major economies.
On its £3 trillion national debt the UK pays approximately £135 billion in interest leaving Burnham and Chancellor John Healey with a £14 billion shortfall in the run up to their first Autumn Budget in October.
Former Labour Chancellor Rachel Reeves blamed the Tory government of Liz Truss, who provoked the anger of the bond markets with her mass unfunded tax cuts to the rich, for what she called this ‘moron premium’.
The reality is that the bond market vigilantes have been losing faith in both the Tories and Burnham’s Labour government being able to bring down the crippling national debt by inflicting savage cuts to workers’ welfare and benefits.
The bond markets are demanding vicious austerity measures to smash all the gains of the Welfare State including benefits, the NHS and the wages of workers, as the only means to bring down the national debt.
This demand has reached the highest levels yet, as the bond markets panic under the weight of the inflationary spiral set off by the US defeat by Iran, and the prospect of oil and gas prices continuing to surge out of control.
This crisis has dealt a blow to all Burnham’s vague promises to rebuild the UK economy and improve the living standards of every worker.
Yesterday, at his first Prime Minister’s Question Time, Burnham insisted that he was committed to no borrowing to fund day-to-day spending, and bringing down the £3 trillion UK debt.
He insisted that he was clear on the need to cut welfare spending and offered the Tories the opportunity to join with Labour ‘in problem solving, not point scoring’ in order to impose the cuts demanded by the bond markets.
What Burnham was offering was for Labour to enter into a coalition with the Tories to carry out a full-scale class war against all the gains of the working class in order to satisfy the banks and financial markets.
With capitalism internationally in a state of collapse these demands have reached a fever pitch.
All the old methods adopted by capitalism to stave off the crisis, from running up massive debts, to waging war to reorganise the world for exploitation by the ruling class, have only accelerated the collapse.
Having reached the end of the road capitalism is determined to take the working class down with it as it collapses into bankruptcy and economic recession.
The working class must use its power to resolve this crisis by demanding its trade union leaders get off their knees and organise mass general strikes to bring down their capitalist governments and replace them with workers governments.
Workers governments will expropriate the banks and financial institutions, going forward to a world socialist system!
This is the only way forward!
