NEW car sales in Britain plunged in March by 15.7% compared to the same period last year, a massive drop that spells out the collapse not just of the motor industry but the entire manufacturing industry in the country. Until now the vast numbers of new cars on the streets have been hailed as proof that British capitalism was not just recovering from the crash of 2008 but was booming.
Along with the massive slump in car sales came the news that the other great proof that British capitalism was thriving took a massive blow, also yesterday. The service sector, which accounts for a massive 80% of the British economy, also slumped to a 20-month low.
The excuses given for this dramatic drop were that the bad weather in March had caused shoppers to stay indoors and caused the entire service sector to grind to a halt! Bad weather was also trotted out to explain away the dramatic collapse of the country’s construction industry which was revealed yesterday.
The UK construction industry suffered its biggest drop in activity since 2016 with the Purchasing Managers’ Index (which measures the amount construction companies are ordering to complete their works) falling below the 50 point mark – this mark represents the point at which expansion of the industry becomes a contraction.
In other words, the industry, still reeling from the collapse of the giant Carillion construction company, is contracting with no large projects in the pipeline. The collapse of Carillion into bankruptcy in January has caused immediate job losses of 1,536 with a further 7,300 at risk. With the entire industry contracting at this rate the job losses will be counted in their tens of thousands.
Bad weather certainly cannot explain away the collapse of car sales. It is now being acknowledged openly that the sole reason for the past high sales rate of new cars was the subprime car finance deals that the motor companies pushed with zeal. In 2008, 1.2 million car finance agreements, known as personal contract purchases (PCPs) were taken out, representing 59% of new car sales. By 2017, this had increased to 2.3 million or 88% of all new car sales. Just as with subprime mortgages in the US which led to the bank crash of 2008, these PCPs were made with scant regard to people’s ability to repay.
Last month, the Financial Conduct Authority (FCA) issued a warning that the rate of defaulting on these car loans was rapidly increasing. None of this was caused by the weather. It is just the inevitable consequence of a brutal austerity regime imposed by the Tories over the working class.
Cuts to pay and benefits means that every worker in the country has been forced to rely on credit to survive, while the car manufacturers have pushed their vehicles through the same promise of cheap loans that turn out to be not cheap at all when your pay is cut and the rent needs to be paid.
The indisputable fact is that British capitalism is on its knees economically and sinking fast into complete bankruptcy.
In the 1980s, the Tories under Thatcher declared that Britain didn’t need a manufacturing base, that the future was in the service sector, mainly the financial service sector. This would provide the wealth that would ‘trickle down’ to the entire population. Propagating this dream, Thatcher systematically set about destroying manufacturing industry and in so doing attempted to destroy the basis of trade unions.
Thatcher never succeeded in destroying the unions or the organised working class but she did lay waste to manufacturing industry. Today, the banks and financial sector are in crisis and only surviving through being bailed out by austerity cuts to workers and now what’s left of British industry is crashing down.
With the bosses and bankers determined to impose this collapse on the backs of the working class, the only way forward is to demand the TUC organise an immediate general strike to bring down this Tory government and bring in a workers government that will nationalise all industry, including cars and construction, along with the banks and place them under the management of workers in a planned socialist
economy.
