THE UK’s public sector net borrowing hit a record high of £20.3 billion in November, official figures show.
The figure was the highest for any month since records began in 1993, while the public sector net debt was £844.5bn, up to November, or 60.2% of Gross Domestic Product. It is heading for a disastrous figure of £1.2 trillion in 2010-11, or some 80 % of GDP.
Government debt as a percentage of GDP has rocketed since the start of the financial crisis.
In November 2008, public borrowing was £15.5bn while net debt stood at £706.2bn, or 49.6% of GDP.
The full years’ forecast for public sector debt remains £178bn, with an even larger public sector debt estimated for 2010-11.
The Bank of England’s bi-annual Financial Stability Report, was forced to issue a caution over the banks, that they would still need further time to recover from the crisis in the financial system and that in the meantime they ‘remain vulnerable to the risk of less than expected economic recovery’.
In other words, they may well need further billions in bail-out money.
The Bank, while adhering to government policy that the banks must lend money to aid the ‘recovery’, nevertheless ‘understands’ that with banking sector profits now ‘relatively buoyant’ again, commercial lenders should ‘take opportunities to strengthen their balance sheets, including by not distributing an excessive amount of profit’.
So much for sponsoring the green shoots of recovery through Quantitative Easing!
The Bank added that the root cause of the crisis in the global financial sector had been ‘excessive risk-taking in the upswing of the credit cycle and insufficient resilience in the subsequent downturn’.
The cynical Bank added that these two factors had to be tackled to prevent a similar crisis happening again in the future. Quite how to do this it does not have any serious ideas, limiting itself to suggestions for some very superficial regulation.
Meanwhile, the Bank aims to spend £200bn in quantitative easing by early 2010, by buying bonds from the bankers.
The harsh reality is that mortgage lending in the UK in November was down 10% from the previous month and was at its lowest level since May.
Gross mortgage lending totalled £12bn during the month, down 14% on November 2008, the Council of Mortgage Lenders (CML) said.
The group said that the latest month-on-month fall could not be solely explained by seasonal factors. It added that a modest seasonal decline between October and November was typical, but a 10% drop was not normal.
On Thursday, the National Association of Estate Agents admitted that the proportion of first-time buyers entering the market was at its lowest for a year in November.
In fact, it constitutes a warning of the crash that will take place in property prices – when rising inflation in the new year forces the Bank of England to raise its interest rate along with a rise in mortgage interest rates, creating very large numbers of repossessions.
There is no doubt that the crisis of the capitalist system is deepening and will not be regulated away. It has to be resolved.
This requires the working class to take action to defend its vital interests and the interests of the vast majority of the middle class by organising a socialist revolution to put an end to the historically outmoded and backward capitalist system.
In its place must come a socialist planned economy where the object of production is to satisfy people’s needs, and to create the conditions for ending the economic and cultural crisis of the capitalist system by humanity going forward to socialism