MICHAEL Saunders, a member of the Bank of England’s Monetary Policy Committee (MPC), is warning that households, and million of workers must brace themselves for significant interest rate rises as the Bank of England moves to head off soaring inflation with a multi-million job-destroying deflationary drive.
He conceded that a rate rise will push up the bills of millions of households, creating a mortgage crisis, homelessness, mass poverty, and mass bankruptcies, including for companies ‘sitting on top of a £1.4 trillion debt pile’.
Workers are already bracing themselves for a £400-a-year rise in gas and electricity bills in April, or before that if the cap is ditched early.
Saunders and MPC colleague Sir David Ramsden have already voted to end the Bank of England money-printing programme early. Tory Business Secretary Kwarteng has denied reports that he has requested ‘billions’ from the Treasury to subsidise energy intensive industries, saying such firms had already been subsidised with more than £2bn in support with electricity costs since 2013.
There are going to be no more bail-outs – just savage cuts and closures, as a major attempt is made to drive the UK’s workers back to the hunger and poverty of the 1930s.
Kwarteng, presiding over a situation of a massive crisis of confidence in capitalism, added: ‘I am as certain as I could be that the country will have a full energy supply over the winter.’ In fact wholesale gas prices have risen 250% since January and energy companies are being closed every day. Last month, nine domestic energy supply companies went out of business, forcing 1.7 million customers to move to new suppliers and on to higher rates.
Paul Richards, chief executive of Together Energy, currently making huge losses, said while he supported a price cap to protect customers, the current mechanism ‘is not fit for industry, nor is it fit for customers’.
He said that somewhere between £1bn and £3bn in costs would be spread back across business and households as a result of suppliers going bust.
Derek Lickorish, chairman of Utilita Energy, which has more than 800,000 customers, said there was no doubt consumers would end up paying for all the failed firms.
Labour’s shadow international trade secretary Emily Thornberry told the BBC Andrew Marr Show on Sunday that the government needed to have a plan and ‘get on with it’, adding that ‘we shouldn’t be in a situation where we wait until there’s a crisis and then react’.
Asked about whether Labour would introduce a price cap for business she said that her party was talking to businesses and it was important to listen to what they said, meaning ‘No’. Households will again see ‘significant rises’ in energy prices next spring, regulator Ofgem has warned.
Its chief executive, Jonathan Brearley, said the price cap, which limits how much energy providers can charge per unit, would go up again because of the ‘unprecedented’ rise in gas prices.
Meanwhile, the TUC leaders remain quiet hoping that something will turn up, but actually leaving the millions of trade union members to face the developing catastrophe with no leadership at all.
There is only one way to deal with this threatening catastrophe for the working people of the UK and the world, and that is to get rid of capitalism.
The TUC must be forced by its millions of members to call a general strike to bring down this Tory government, to prevent Johnson from forming a coalition government with Starmer’s Labour to force the working class to accept this crisis and the destruction of its jobs and basic rights.
The trade unions must form Councils of Action in every city to mobilise millions of people to actively support a general strike to bring down the Tories and go forward to a workers’ government and a nationalised and planned economy, under workers’ management that will be able to satisfy the needs of the people.
Nationalising the UK banks and the major industries is the only way to end this capitalist crisis and will create the conditions for encouraging EU workers to end the EU and go forward to the Socialist United States of Europe!