FALLING incomes will mean the biggest drop in living standards for middle-income families since the 1970s, when the Yom Kippur war resulted in the tripling of oil prices and a massive inflationary surge. For lower income, working class families and the poor facing the scrapping of benefits, the outlook is pauperism and hunger.
Modern capitalism, after the 2008 banking collapse, is staggering into an even bigger banking crash. It faces the ‘recapitalisation’ of the EU’s big banks, by the EU Central Bank increasing its debt load by over one trillion euros, to try to stave off the collapse of the EU and the Euro Zone, and a major world wide slump that it is now admitted will be far worse than the 1930’s.
It is in this context that the Institute for Fiscal Studies (IFS) has actually understated the impact of this developing crisis, with its declaration of yesterday that the next two years will be ‘dominated by a large decline’ in incomes, pushing 600,000 more children into poverty.
It adds that by 2013 there will be 3.1 million children in poverty in the UK, along with tens of millions of workers and pensioners, as the cuts get more savage in an attempt to match the disintegration of capitalism as its crisis deepens.
The perspective of the IFS is actually an acute understatement of the position, since it states that 2.2 million children and two million working age adults were living in absolute poverty in 2009-10.
It reports that 17 per cent of UK children were living in absolute poverty in 2009-10.
Universities Minister David Willetts spoke up yesterday, and made no attempt to lift the gloom. He said: ‘We’ve tried to do the things that help but you can’t ignore the basic rules of economics that when you inherit a situation where the economy has shrunk by seven per cent there isn’t the money there.’
It is in this situation that the BofE is discussing opening the inflationary floodgates, by raising the printing of money, quantitative easing, up to £500bn, and where the government is pledged to loan billions to big business with no return guaranteed!
Yesterday confirmed the grim reality, with the ONS state statistics body confirming that UK manufacturing output fell by 0.3 per cent in August!
The UK economy deteriorated in the third quarter and is showing signs of stagnation, according to the British Chambers of Commerce (BCC).
Last week, official figures showed the UK economy grew by 0.1 per cent between April and June, less than the 0.2 per cent estimated previously.
The coalition government has no room for manoeuvre. As the crisis deepens and the banks and industries go broke, it must make the working class and the middle class, their children and the pensioners, pay for this crisis by imposing on them the most savage cuts ever seen in the UK.
The policy at home is to rob the people to prop up the banks and the bosses. This home policy is the basis of the coalition’s foreign policy. This can be seen in Libya to be the killing of tens of thousands of men, women and children in order to steal Libya’s oil wealth and to try and begin the recolonisation of Africa.
The future being organised by the bosses is war on the workers at home combined with an attempt to reimpose imperialism on Africa and Asia. This will lead to another ‘great war’ to redivide the planet among the imperialist powers, by crushing the movement of national liberation and overthrowing the degenerate and deformed workers’ states of Russia and China.
There is only one way out of this crisis for the workers of the UK and the workers of the world.
That is to smash and overthrow capitalism and imperialism with socialist revolutions, leading to the victory of the world socialist revolution.
This will replace bankrupt, out of date capitalism with socialism and a planned economy based on satisfying people’s needs in the UK and throughout the world.