SHOCK economic data on Thursday revealed a crash of 0.1 per cent in the UK’s Gross Domestic Product (GDP) for two consecutive months, with Britain on the verge of a full-blown slump, demolishing PM Sir Keir Starmer’s delusion that he was growing the UK economy to raise living standards and fund government spending.
The pound sterling also crashed on Thursday. The value of the pound dropped 0.3 per cent against the dollar to $1.264 and slipped 0.2 per cent versus the euro, which is worth 82.7 per cent.
Referring to the figures published by Office for National Statistics (ONS), Julian Jessop, economics fellow at the Institute of Economic Affairs, said: ‘The second successive monthly fall in economic activity in October should put the UK firmly on recession watch. Indeed, output per head may already be falling for the second quarter in a row.’
Indeed, the background to the UK’s economic demise, is a Europe, where France’s Barnier government is facing huge working class opposition to public spending cuts, and Germany’s ‘economic miracle’, centred on engineering and auto production, is imploding with the first ever closure of several Volkswagen factories.
According to the Telegraph’s Ambrose Evans-Pritchard, the EU is approaching Armageddon.
He says: ‘The European project has failed as an economic experiment. This brutal truth must soon intrude on internal British politics.
‘The eurozone has seen hardly any growth for a quarter century. Per capita GDP in the EU as a whole is $40,800 compared to $81,700 in the US. The EU’s Draghi report says real disposable income per person has grown almost twice as fast in America since 2000.
‘From my angle of view covering the world economy, the EU looks like a mid-tech backwater at risk of accelerating decline. It has no credible answer to this and is mostly making matters worse.
‘It has killed Europe’s nascent AI industry by treating it as a threat. The US and the UK are running away with nuclear fusion while the EU argues over how safe it is. Europe is driving away its AI-tech start-ups. The Northvolt bankruptcy confirms that Europe cannot even build batteries at a viable cost.’
The National Institute of Economic and Social Research’s (NIESR) Paul Mortimer-Lee, also issued a warning that Trump risks tipping the US into recession if he follows through with the promises made on the campaign trail.
He added: ‘The ill-considered, rushed and damaging’ combination of tariffs, the mass expulsions of illegal immigrants, tax cuts and spending efficiencies was ‘likely to tip the US economy into recession’.
‘In a worst-case scenario, where immigrant expulsions are massive, tariff increases hit straight away and retaliation is swift and effective, GDP could contract by two to three percentage points.’
Such an outcome would mark a massive slump when compared to the strong growth enjoyed by the US this year. NIESR estimates America’s economy expanded by 2.8 per cent in 2024.
A recession in the world’s largest economy would send shockwaves across the globe.
Trump campaigned on a central promise to impose steep tariffs on imports, including of up to 60 per cent on China, and 10-25 per cent on the rest of the world, and to restrict immigration, cut taxes and slash government spending.
He said: ‘Expelling five million workers could reduce GDP by close to 2.5 per cent. Since expulsions would continue for years, the reduced rate of growth in GDP would be persistent – not a one-off shock like tariffs.’
Shortages of workers, particularly in migrant-heavy industries such as agriculture, retail and construction, are likely to send wages spiralling and will stoke inflation and tariffs.
Capitalism is in its death agony, plunging the world into the abyss of global depression, slump and war against the working class at home and internationally.
The only solution to this crisis of humanity is to overthrow capitalism with socialist revolutions.
We must rapidly build the WRP and sections of the International Committee of the Fourth International in every country to lead this struggle for the victory of the world socialist revolution. Join the WRP and the Young Socialists today!
