Britain’s Trade Crashing To Disaster

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2006 saw Britain’s trade in goods dive to a massive deficit of £84.3 billion.This was £15.5 billion more than the £68.8 billion deficit figure for the trade in goods in 2005.

The growth in the goods deficit by 23 per cent in one year proves that British capitalism is finished as a productive force.

The trade deficit, which includes invisible earnings and financial services from the banks of the City of London, was little better.

The total UK trade deficit for 2006 was £55.8 billion, up 25 per cent from the 2005 trade deficit figure of £44.6 billion.

The UK has now taken over Turkey’s historical position as the sick man of Europe. The British trade deficit was the biggest since figures began to be taken in 1697.

Britain’s main EU rivals France and Germany fared better.

France’s trade deficit hit a record of £19.5bn in 2006, a third of Britain’s, as high energy costs and falling exports took their toll.

French exports totalled 386.9bn euros last year, but imports reached a higher 416.1bn euros, official figures showed.

France’s trade deficit contrasted sharply with the record 162bn euro surplus reported by Germany on Thursday.

Britain’s bad trading position is worsened by the indebtedness of the population. There is £1.4 trillion of household debt in the UK, something which does not exist in either France or Germany.

This is a product of the Blair government’s policy of encouraging the middle class and sections of the working class to throw all caution to the winds and to stop saving.

Instead, Brown has told people to borrow, borrow, and borrow from the banks, at what used to be cheap interest rates, in order to spend, spend, and spend, to keep a very weak capitalist economy going.

Now, with the US economy stalling, and inflation rising (the British government’s own figure which understates massively the real inflation rate is at 4.4 per cent) and with interest rates rising, the middle class, homeowners with mortgages, and individuals with big credit card debts are starting to go bust or are starting to lose their homes to repossession by the banks.

Individual bankruptcies reached 107,288 in 2006.

When UK rates rose to 5.25 per cent in January they added £16 to the monthly payments of a £100,000 repayment mortgage.

Just over 17,000 properties were seized by lenders in the first half of last year, 65 per cent up on the figure for 2005

British capitalism is now walking the high wire without a safety net.

Its policy is that wage rises must be held down at all costs to two per cent, well under the rate of inflation as far as Chancellor Brown and the Bank of England are concerned.

The governor of the Bank of England has spelt it out that bigger wage rises will be answered by higher interest rates, to defend the pound sterling and to try and prevent the British debt mountain from collapsing by deflating the economy.

Both Brown and the Bank of England look upon a massive influx of Eastern European cheap labourers into Britain as playing a vital role for the future of British capitalism, by holding down the wages of the working class as a whole.

Inflation is however rising inexorably as the capitalist system crashes and the struggle for vital areas of raw materials becomes literally more explosive.

Higher interest rates will mean much more unemployment and a further collapse of production.

They will also bring huge pressure to bear on the pound, which even bourgeois commentators reckon is at least 30 per cent overpriced.

All the chickens of British capitalism are coming home to roost and the ruling class intends to drop the full weight of the developing crisis onto the back of the working class and the middle class.

Only a socialist revolution will save the wages, jobs, pensions and homes of British workers from the bourgeois onslaught. Its organisation is a matter of life or death.