AFTER all of the Tory propaganda chatter about the ‘recovery has begun’ the reality is that the slump is deepening.
The UK’s manufacturing sector, that is the real economy, shrank in October for the sixth month in a row. The Markit/Cips purchasing managers’ index (PMI) fell to 47.5 last month from a revised 48.1 in September.
The collapse, said Markit, was mainly due to the continuing economic slump in the EU and the lower demand from Asia, whose major industrial power, Japan, is also under the hammer of the slump.
With the UK industrial base in slump, the service industries are now the only hope of the UK economy. The theory for this was developed by Thatcher and carried out by Blair. Manufacturing was to be globalised and the British people would prosper from a fraction of the vast wealth of the banks trickling down to the masses working in the various service industries. This was to be the future. Then came the greatest banking and industrial collapse in the history of capitalism.
The cry now after the manufacturing slump is ‘Let’s wait for the services number in a couple of days and make a judgement then. It is probably too premature to make judgement on the full economy based on an export-orientated manufacturing sector.’
What was once the workshop of the world, now depends for its survival on the likes of Kentucky Fried Chicken.
Industry is being hard-hit and it is going to be hit even harder with Ford and GM making billion-dollar losses in Europe and about to shut down a number of British and EU car plants.
All the talk of export-led recoveries is now accepted as just nonsense. The reality is that the British economy is collapsing and further industrial and banking crises are on the way to further cut purchasing power and undermine even the service industries.
Today Comet, the electrical retailer, is expected to go public and announce the closure of its 240 stores with the loss of 6,000 jobs.
The OpCapita venture capital group has lined up Deloitte to act as administrator, while it organises for sales, closures and liquidation.
Having millions of workers unemployed, and millions more working part-time on below subsistence wages, is not the recipe for maintaining or growing service industries.
The Comet disaster comes after America’s Best Buy recently pulled the plug on 11 giant electrical stores after failing in the UK market.
The banks as well are deepening their debts. Lloyds Banking Group has raised its PPI mis-selling bill by a further £1bn to cover compensation for customers who were mis-sold payment protection insurance.
It brings the bank’s PPI bill to £5.275bn so far. This means Lloyds has been pushed into a loss of £144m for the third quarter of the year.
After Barclays recently decided to set aside a further £700m for PPI compensation, the banking industry’s bill now stands at just over £11bn which, no doubt, the taxpayer will be presented with as soon as the EU banking crisis hits home.
Now Barclays, on top of the PPI fiasco, faces an additional bill, a $470m energy fine from US regulators to settle accusations it sought to manipulate the California energy markets from 2006-2008.
This is in top of the $290 million that the bank had to pay over the Libor rate-rigging scandal.
The issue is clear. The crisis of capitalism is continuing to deepen. The patient is weakening fast, and must be put on a ‘death pathway’, as prescribed by Lenin and Trotsky, a socialist revolution that will expropriate the bosses and the bankers and replace bankrupt capitalism with a socialist planned economy.
