Deepening crisis means revolution in the UK and Ireland

0
856

THE amount of new public sector borrowing in the UK hit a record of £15.9bn for August. This is £1.8 billion higher than in August 2009, when net borrowing (excluding financial sector intervention) was £14.1 billion, according to the Office for National Statistics (ONS).

The larger-than-expected figure came after higher inflation led to a rise in interest payments on index-linked government bonds.

The latest figure means borrowing in the first five months of the financial year has reached £58.1bn.

The interest paid out on government debt was nearly £4bn in August, a near trebling of the figure in the same month a year ago.

The official reason is that payments to holders of inflation-linked bonds were unexpectedly low a year ago because inflation – as measured by the Retail Prices Index – was close to zero.

Tax revenues are rising, but rising faster are the costs of servicing the UK’s debt. This means that the most savage cuts of the chancellor may well reduce the deficit, but the overall stock of debt will keep rising in the period ahead.

However, the Bank of England forecast for borrowing for 2010-11 as a whole has remained at £149bn, down from last year’s total of £155bn.

The ONS said the rise in the retail prices index, which is used to set payments on index-linked bonds, meant interest payments almost trebled to £3.8bn last month, compared with £1.3bn for August a year ago.

Public sector net debt (excluding financial interventions) at the end of August 2010 was £823.3 billion (56.3 per cent of GDP), up from £667.7 billion (47.7 per cent of GDP) at the end of August 2009.

Including intervention measures, at the end of August 2010 public sector net debt was £934.9 billion (equivalent to 64.0 per cent of GDP). This compares to £802.7 billion (57.4 per cent) as at the end of August 2009.

The British capitalist economy is now closing in on £1 trillion in debt, with Gross Domestic Product at £1.4 trillion.

Yesterday the Irish Republic raised 1.5bn euros through an auction of government bonds at an interest rate of between 4.77 per cent for four year bonds, and a 6.02 per cent rate for eight year bonds, in the face of the market frenzy of recent weeks and the market panic about the rate at which the Republic is racing into bankruptcy.

Ireland has now raised 20bn euros from the bond markets in 2010. The Irish government is claiming that its Exchequer is now fully funded through the first half of 2011! What is to happen after that nobody can say.

The Irish central bank is trying to shrug off fears that the country will need a bail-out from the International Monetary Fund (IMF).

The scale of the savage cutbacks needed in Ireland can be measured by the statement of the Irish Central Bank that ‘If the economy stays close to the track originally envisaged, the deficit would come close to three per cent (of total economic output) by 2014.’ In fact, the deficit is now approaching 20 per cent of GDP, with a huge increase in state indebtedness ahead from the projected multi-billion euro attempt to prevent the complete collapse of the Anglo-Irish Bank.

The deepening of the world crisis, testified to by yesterday’s OECD prediction that millions of US workers, sacked since the 2008 crash, will never work again, means that the only way out of the crisis for the workers of the UK, Ireland and the rest of the capitalist world is through carrying out the world socialist revolution and getting rid of capitalism and imperialism.