The International Monetary Fund (IMF) this week joined in the chorus of bankers, speculators and capitalist financiers warning the Labour government that it must carry on cutting back public spending on the Welfare State or face bankruptcy.
In its annual ‘health check’ on the UK economy, the IMF went out of its way to praise Labour chancellor Rachel Reeves for striking ‘a good balance between deficit reduction and growth-friendly spending’.
The IMF was making a thinly veiled threat to Labour MPs that the imminent prospect of a leadership contest that would topple Keir Starmer and bring down Reeves will risk plunging the UK economy into bankruptcy.
Despite the fact that Andy Burnham – the frontrunner in any campaign to replace Starmer if he wins a seat in parliament – has insisted that he is committed to reducing the UK’s massive national debt of around £3 trillion the IMF and money markets are still panicking.
In its health check, the IMF warned the risks to the British economy were ‘tilted to the downside’ and the risk that ‘domestic uncertainty could also add to the already volatile global environment.’
The IMF avoided commenting on the fact that Starmer and Reeves have earned the hatred of the working class, which has turned its back on the Labour government, and instead insisted Britain was hemmed in by tough ‘economic realities’ that would limit the government’s ability to make any radical changes.
Luc Eyraud, IMF mission chief to the UK, said: ‘Today’s policymaking is constrained by a more volatile external environment with more frequent and overlapping shocks; a rising public interest bill in part reflecting market concerns with countries’ elevated debt’.
Eyraud went on to say that British capitalism could benefit from political stability and a government that would carry on with Reeves’ policy of ‘fiscal responsibility’ – that is never spending more than bankrupt British capitalism can afford.
The IMF is, in effect, warning that the impact of the failed war waged by US imperialism along with Israel to crush Iran and seize control of its oil wealth has rebounded massively on the UK economy.
Already, the full effects of the oil and gas crisis have started to filter through into the ‘fragile’ UK economy hitting the pockets and jobs of the working class and youth.
Official figures this week revealed that the number of payrolled jobs in the UK fell by 100,000 in April and that regular pay, excluding bonuses, increased by just 3.4% from January to March.
Last month, the official rate of inflation was 3.3%, an increase over the previous level of 3%, but with the ongoing war in the Middle East inflation is set to rise into the stratosphere. The Food and Drink Federation has revised its food inflation forecasts and now expects it to reach over 9% this year.
With UK workers facing an imminent massive increase in energy bills, estimated to be up to £300 per household, Reeves is desperately attempting to ward off an enraged working class that is refusing to see its lives destroyed by mass unemployment and starvation levels of inflation.
While the IMF may be rooting for Reeves and Starmer and demanding any Labour government continues to act in the interests of the bosses and bankers, the working class and youth have already spoken.
The Guardian newspaper yesterday summed this up writing that while the IMF may have given Reeves ‘their seal of approval, households hit hard by rising unemployment and squeezed living standards are unlikely to be feeling sympathetic.’
That’s putting it mildly!
The working class are demanding action, not a return of a Labour prime minister committed to forcing workers and their families to passively accept being driven into absolute poverty in order to keep British capitalism from crashing into recession and bankruptcy.
Now is the time for the working class to demand the TUC act by calling an emergency conference to immediately call a general strike to bring down the Labour government and go forward to a workers government.
A workers government will nationalise the major industries and banks placing them under the management of the working class and replacing a bankrupt capitalist system with a planned socialist economy.
