EU tearing itself apart while British capitalism collapses under a sovereign debt crisis


On Friday EU leaders gathered for a three-day summit to agree on a proposed £1.6 trillion financial plan to bail out the national states from economic disaster in the face of the worst recession in history.

Splits erupted immediately over differences between various blocs as to how the so-called coronavirus recovery fund would be handed out and what strings would be attached to any of the loans made available under it.

The split was over the 750 billion euro recovery fund that is to be used immediately to try to pull the EU out of recession.

This 750 billion is funded by the EU borrowing from the private financial markets, an unprecedented step for the EU and a mark of the desperation dominating Brussels.

In one corner stand the ‘frugal four’ a group of northern states comprising Austria, Denmark, the Netherlands and Sweden.

This bloc is insisting on the right to veto any access to the fund by countries that do not meet the strict criteria of economic reforms in the form of controls over public spending and imposing austerity.

This caused the Bulgarian prime minister Boyko Borissov to accuse the northern states of wanting to be ‘the police of Europe’.

The next split was over the size of the recovery fund to the hardest hit countries.

Already, the 500 billion euros earmarked for grants had been reduced down to 450 billion at the insistence of the northern states, and now they were demanding an even bigger cut, causing German chancellor Angela Merkel and French president Emmanuel Macron to storm out of a meeting with them.

The unity of the EU was further shattered when the Netherlands raised the issue of restricting any loans only to countries that ‘uphold democratic values’ – a clear swipe at the governments of Hungary and Poland who are both under EU investigations on the rule of law.

The EU is breaking up under the impact of a world crisis that has left the largest economies of Germany, Italy and Spain in recession with their banking systems overloaded with debt, while the weaker countries in the south and east of Europe realise they will be slung overboard as the stronger states struggle for survival.

All the debt being run up in a hopeless attempt to avoid the countries of the EU crashing into bankruptcy will have to be repaid through imposing the most savage austerity on the working class of Europe.

This will meet the revolutionary resistance of workers throughout the EU.

Alongside the collapse of the EU is the crisis gripping the UK economy as the capitalist class face the reality that there will be no chance of any recovery.

Last week the Office for Budget Responsibility (OBR) issued the dire warning that UK public finances are on an ‘unsustainable path’ as over four million people face being thrown out of work by the end of the furlough scheme.

The OBR warns of a catastrophic blow as government income from taxes plummet while state spending surges with the Tories on track to borrow £372 billion this year as it attempts to prop up bankrupt British capitalism.

Swamped by this mountain of debt the OBR is predicting a future of never ending austerity – despite all the pledges from Boris Johnson that austerity has ended.

The Telegraph reported last week that an internal document from the Treasury last May warned of a ‘sovereign debt crisis’ and put forward proposals for a public sector pay freeze along with cuts to the welfare budget to raise £30 billion a year.

This crisis is revolutionising the working class across Europe and Britain determined not to be brought down along with the collapsing capitalist system.

The issue immediately before the working class is to put both the EU and British capitalism out of its final misery by seizing power and advancing to socialism.

What is absolutely necessary to lead this struggle is the building of revolutionary sections of the Fourth International in every country to lead the socialist revolution and unite the working class in a common struggle for the United Socialist States of Europe.