YESTERDAY’S reports on the state of the economy reveal more about the catastrophe gripping British capitalism, part of the world crisis.
• The Bank of England reported that the number of new mortgages approved for buying homes fell in July to 33,000, down a huge 71 per cent on the same month in 2007.
Bank lending to mortgage borrowers shrank by £12.1bn in July compared with June, the biggest monthly contraction on record. The lack of credit for home buyers has seen property prices drop by 10 per cent since the beginning of the year.
• As a result of the so-called ‘credit crunch’, that is the fact that banks and other financial institutions are weighed down by vast, unknown levels of debts that will not be repaid, one of Europe’s largest banks has been sold off. The German Dresdner Bank, was sold by the insurance group Allianz to Commerzbank for £9.8bn.
Commerzbank announced that it will axe 9,000 jobs after the merger, including 1,000 in the City of London. Britain’s financial centre is already facing 20,000 job losses.
• Alongside what is happening to banks and other financial institutions which manipulate paper bills of exchange, credit notes, tokens, stocks and share certificates, production of goods is also being hit.
The biggest group of manufacturing capitalists, the Engineering Employers Federation, reported that one in five of the 800 firms it surveyed cut their workforce in August. This is the fifth month in a row that the EEF has reported widespread job cuts and this is the worst situation for nearly 10 years.
EEF chief economist Steve Radley said that with ‘a global economic slowdown and a massive increase in its costs. . . . there are now clear signs that these pressures are starting to take their toll on companies.’
Since Labour took office in 1997, the decline in manufacturing industries has been continuous and more than a million jobs have disappeared.
• The EEF figures were published on the day that Charles Goodhart, a former member of the BoE’s Monetary Policy Committee, said Britain faced a severe recession over at least the next year.
He said that by September 2009, ‘the UK is quite likely to have seen four quarters of declines. How bad could that get? The honest answer is that no one knows since credit crunches of the scale of the present one are very rare, and its combination with an energy and commodity price upsurge even more rare.’
Gone are the days when Prime Minister Gordon Brown, as Chancellor, boasted that the Labour government had ended ‘the era of boom and bust’.
Darling, who comes from the same school of financial sorcery as Brown, said last weekend that the economic conditions faced by Britain and the rest of the world ‘are arguably the worst they’ve been for 60 years’.
He added: ‘I think it’s going to be more profound and long-lasting than people thought.’
Faced with the economic catastrophe gripping British capitalism, Darling’s statement is part of the government’s agenda, which will become clearer when Brown announces measures on the housing crisis today and when he speaks to the Confederation of British Industry on Thursday.
So far, the government’s strategy has been to do everything to prop up the banks and monopolies, and put the full burden of the crisis onto the working class.
In this situation, it is necessary for workers’ trade unions to adopt a strategy to defend jobs and living standards – work-sharing with no loss of pay and index-linked pay agreements.
This must be linked to the fight to mobilise the whole trade union movement to remove the Brown government and replace it with a workers’ government.
Such a struggle will mean removing union leaders who still insist on funding the Labour Party under Brown’s leadership and who have foisted pay-cutting deals on their members in the public services.
Join the Workers Revolutionary Party and build a new leadership in the unions that will organise the revolutionary struggle of the working class to overthrow capitalism and implement socialist policies!
