The head of the International Monetary Fund (IMF), Christine Lagarde, issued the gravest warning yet on the state of the UK economy on Tuesday, indicating that as far as the IMF is concerned Britain stands right on the edge of financial and social collapse.
In the IMF report on the British economy she went out of her way to praise Cameron and Osborne for their slash and burn policy towards the welfare state and the massive job losses in the public sector saying that deficit reduction was ‘essential’ in the medium term — Lagarde even claimed that she ‘shivered’ at the mere thought of what would have happened if they had not embarked on this road.
But if she was shivering over this thought she is positively hysterical at the thought of where these policies are inevitably leading.
After praising the coalition she damned them with the simple fact that none of these measures have worked in rescuing British capitalism from the prospect of bankruptcy.
Far from somehow promoting ‘growth’ in the economic system the cuts have inevitably accelerated the downward spiral into complete economic collapse.
Not that Lagarde or the report put it so bluntly, in a coded message she said: ‘Growth is too slow and unemployment, including youth unemployment, is too high. Policies to bolster demand before low growth becomes entrenched are needed.’
She added that if such policies were not adopted, and adopted very quickly, then ‘Britain will pay a heavy long-term price.’
If you strip out the political pats on the head for Cameron and the coalition what remains is the plea for an immediate turn to the mythical Plan B.
For the IMF this amounts to increased government spending on infrastructure projects to promote employment and growth, the money for this to be found through the Bank of England embarking on a further round of quantitative easing, greatly accelerating the plans it already has for electronically conjuring up £325 billion out of thin air.
At the same time the IMF urged temporary tax cuts and a cut in interest rates.
This plea by the IMF for a turn to a Plan B is a mark of the desperate situation facing world capitalism and the cataclysmic effect it is having on the weak British economy.
Creating worthless electronic money in an attempt to buy a way out of a terminal economic crash can only lead to massive hyper-inflation where entire currencies become worthless overnight.
This is the great fear expressed by the German bourgeoisie who are now head on in conflict with the IMF and absolutely resolute in demanding that cuts of the most savage kind offer the only hope for capitalism.
What drives Lagarde and the IMF to risk such a catastrophe is their terror of the revolutionising effect the crisis is having on the working class and especially on the youth who are bearing the full brunt through massive levels of unemployment.
Since last Christmas Lagarde has been consistently warning of the dangers of revolution throughout Europe as workers and young people refuse to sit back and accept the destruction of their lives and their future in order to bail-out the banks.
The reality is that there is no way out for capitalism in Britain or throughout the world other than to make workers, youth and the poor pay for the crisis in blood.
The only solution for the working class is to put an end to this bankrupt system once and for all.
In Britain this means that workers must immediately demand that the trade union leaders call an indefinite general strike to kick out this government and advance to a workers government and socialism.