THE economy of the Eurozone countries is sinking even deeper into crisis making a mockery of all the talk about an economic ‘recovery’.
This was revealed yesterday in the release of statistics by the official statistical office of the EU showing that the gross domestic product (GDP) across the whole of the Eurozone rose by just 0.3% in the last quarter.
It was confidently predicted by leading economists that economic growth would remain at a constant 0.4%. The picture in individual countries in the Eurozone was very similar, growth either static or showing minuscule increases – far below predictions.
Germany, the biggest economy in Europe, saw an increase in growth of just 0.3%, down from the 0.4% in the previous quarter, with France also growing by just 0.3%. The economies of some Eurozone countries either didn’t grow at all (Portugal) or actually shrank (Finland and Greece.)
Behind all these percentage figures lies a very clear message: namely European capitalism, along with every other capitalist nation in the world, is rapidly sinking and only kept staggering on through debt.
According to financial analysts, the main reason that any growth at all is being recorded is down to consumer spending. This was succinctly put by an expert from ING Financial Markets, Peter Vanaden Houte, who said: ‘Consumers probably saved the day for the Eurozone economy’ adding that household consumption was ‘the single most important driver of the expansion at this moment.’
Bankrupt British capitalism is leading the way in this catastrophic collapse of manufacturing and the almost total reliance on consumer spending to keep the ship from sinking immediately. Before the general election, Tory chancellor, George Osborne, boasted that Britain had grown faster than any other advanced capitalist economy. What he failed to add was that this growth was entirely due to a growth in consumer spending – spending that was financed through personal debt in the form of credit cards, loans and overdrafts.
By the end of 2016, it is estimated by the accountancy group PwC the average UK household will owe nearly £10,000 in unsecured debt, excluding mortgages. At the same time, manufacturing industry has collapsed.
Last month, the entire British steel industry was closed down with the loss of thousands of jobs.
On Thursday, Rolls Royce issued a devastating profit warning, its fifth in 21 months, driving its share price down by 20% to a six-year low.
This was just one part of the collapse of the British aerospace and defence industry with the defence contractor BAE announcing hundreds of job losses due to the lack of orders for the Eurofighter Typhoon.
The collapse of manufacturing industry, which produces commodities that are the only real repository of value, is happening on a world scale with multi-national companies like the giant mining company Glencore teetering on the brink of bankruptcy, unable to pay off billions of dollars-worth of debts as the demand for metals crashes under the weight of the world crisis of capitalism.
The stark picture both in Europe, the UK and the rest of the capitalist world is one of collapse and debt on a colossal scale, where every attempt by the capitalist state banks to stave off catastrophe by handing out free money to the banks through quantitative easing and near zero interest rates, has resulted in a debt-fuelled orgy on the international money and stock markets, creating a bubble that will burst at any time while manufacturing industry is wiped out.
The situation is untenable. Even the Bank for International Settlements (the central bank of central banks) has warned of the ‘toxic mix’ of private and public debt. Capitalism has reached the end of the road historically, kept going only through debt – debt that the bankers intend will be paid for by the working people of the world.
The time is overripe for this bankrupt capitalist system to be put out of its misery through the victory of the world socialist revolution and the advancement of humanity to a socialist system where production is for need not for the profit of a handful of capitalists.
