THE Bank of England’s Monetary Policy Committee yesterday kept rates at 0.5%.
Inflation however is continuing to rise as world oil, wheat, meat, cotton and petrol prices surge upwards with increases that dwarf the Consumer Prices Index (CPI) inflation rate, which at 3.3% in November, was still well above the Bank’s target rate of 2%.
The Bank is desperately resisting an increase in the bank rate because when it happens it will be the beginning of a process of pushing the rate up to around 5%, enough to put the homes of several millions of people at risk, and also to slash the amount of cash being spent on basic commodities, further undermining any prospect of growth.
Food prices are now at their highest level on record, according to the UN’s Food and Agriculture Organisation (FAO).
It tracks the wholesale cost of major foods such as sugar, meat and cereals, and says that prices last month were higher than their peak in 2008, when a food crisis prompted riots and demonstrations around the world.
The FAO was keen to say that we are not in the midst of another emergency, but as the current revolutions in Tunisia and Algeria have been caused by higher food prices and unemployment, alarm bells are ringing once again all over the capitalist world.
Recent data suggested that manufacturing is the only section of the UK economy to be showing signs of growth, however the just-released trade figures show that the weak pound is still failing to boost UK exports, and revealed a record trade deficit for November.
The Office for National Statistics said that Britain’s goods trade gap widened to £8.736bn in November from an upwardly revised £8.591bn in October.
Britain’s surplus in trade in services improved, but not by enough to offset the widening deficit in goods. The total trade deficit – including both goods and services – increased to £4.123bn from £4.038bn, its highest since August.
Alan Clarke, bourgeois economist at BNP Paribas, said: ‘Exports are improving, they’re going up, but just not as fast as imports.’
The great fear of the bourgeoisie is that the real inflation rate of the necessities that working class families must have to live is shooting up so rapidly that there will be enormous pressure on the wages front. This will see the trade union bureaucracy’s policy of accepting wage cuts and wage freezes to try to save jobs being overturned and giving way to big wage struggles for major increases in wages.
Dealing with this crisis will require big increases in the bank rate to hose down the galloping price inflation by creating more unemployed, while at the same time it will see hundreds of thousands of people unable to pay their mortgages, thus losing their homes.
This is the nightmare bourgeois scenario that the capitalist crisis is creating.
This is why an agitation has already begun to strengthen the anti-union laws and create even tougher anti-strike laws, under the guise that this will be the only way to stop the TUC harming production when it begins its protest actions.
Coalition leader Cameron has already agreed that anti-union laws could be tightened to stop trade unions launching a ‘wave of irresponsible strikes’ against public spending cuts.
He said he was prepared to revisit the laws introduced by Margaret Thatcher in the 1980s to make it harder for unions to lead walk-outs. The coalition intends to take away the right to strike!
The situation that the capitalist crisis is creating throughout the world and in the UK is a revolutionary one, where workers are being given no alternative but to rise up.
What workers require is a new and revolutionary leadership. This must be built in the organisation of a general strike to bring down the coalition and bring in a workers government that will expropriate the bosses and the bankers and bring in socialism.
