CHANCELLOR Darling began his budget speech yesterday on a note of contrived optimism saying that ‘today’s budget will take Britain through the most serious global economic turmoil for over 60 years.’
He was speaking on a day when government statistics revealed that its borrowing for the last financial year had reached £90bn (up from the previous year’s £55bn) and unemployment in the three months to February had rocketed up by 177,000.
The UK’s total net debt is now £743.6bn, the equivalent of more than half of the UK’s GDP £134.5 bn of this is the cost of bailing out the banks, up to March 2009.
Darling continued that this financial year will see the government borrow up to £175 bn!
He confirmed that this was the worst year for the economy since the Second World War with a 3.5% decline in 2009 – far worse than his pre-Budget forecasts.
In Alice in Wonderland mode, Darling made clear that his plans depended on a rapid economic bounce-back from the slump, of which there is not the slightest sign, with a forecast of 1.25% growth next year rising to 3.5% in 2011.
However he did confirm that ‘Last autumn, the dramatic failure of one of the top investment banks in America – Lehman Brothers – shattered already fragile confidence and brought the international financial system to its knees.
‘Since then, an extraordinary international financial crisis has fed into the wider economy, causing a steep and widespread world recession.’
This extraordinary crisis is to be over in a year!
He continued: ‘Next year, because of the pick up in world demand, the continuing benefit of lower prices, and the substantial recovery measures put in place, I am forecasting growth of one and a quarter per cent in 2010. . .
‘From 2011, I am forecasting that the economy will continue to recover, with growth of three and a half per cent from then on.
‘But in future years, the economy will recover towards a trend rate of growth of around two and three quarters per cent.’
He then declared that ‘due to the measures that I will announce today, the current deficit is expected to halve within four years.’ This is a cut of some £85bn.
This is to be done by imposing workfare onto the unemployed and attacking the public sector.
‘Our own figures for public sector net borrowing will be £175bn this year, or some 12.4 per cent of GDP.
‘From 2010, as the economy starts to recover, and the measures announced in November and today take effect, borrowing will fall to £173bn, then £140bn, £118bn and £97bn.
‘As a share of GDP, our borrowing will be 11.9 per cent of GDP next year, and then, as we move towards balance, 9.1 per cent in 2011-12, then 7.2 per cent and 5.5 per cent in 2013-14.
‘UK net debt, which includes the cost of stabilising the banking system, will, as a share of GDP, increase from 59 per cent this year, to 68 per cent next, 74 per cent in 2011-12, 78 per cent and 79 per cent in 2013-14.
‘It will stabilise and then begin to fall in 2015-16.
‘Because of the steps we are taking, I expect the underlying current budget deficit to come back into balance two years later, in 2017.’
It is to be eight years of slashing cuts in the public sector.
Darling continued: ‘This will require tough decisions, but I am determined that they will be fair decisions.’
He added: ‘Since 2004, the Government has identified and made £26.5 billion in efficiency savings, while continuing to invest to improve schools, hospitals and other public services’, referring to the drive to privatise the NHS and education.
Darling continued: ‘In November, I announced plans to find an additional £5bn of efficiency savings in 2010-11, on top of a total of £30bn in this spending review period. . .
‘Yesterday, we published the reports of the five independent reviews I set up last year. They have identified extra efficiencies from 2011 which rise to a further £9bn of additional savings a year by 2013-14. . . .
‘The Government has set itself a central goal of realising up to £16 billion of property and other asset sales in the three years from 2011-12, with proceeds raised being used for new capital investment.’
In his speech Darling was unable to face up to the depth of the economic crisis and had to take refuge in the fiction of a one year recovery.
In fact the crisis will deepen and the attacks by the government on the working class will become ever more desperate.
Capitalism is in its death agony. The only remedy is a socialist revolution.