IT SPEAKS volumes for the disastrous state of British capitalism that news that the UK economy has collapsed by a further 1.5% in the first three months of 2021 is greeted by bourgeois commentators and politicians as a sign of its strength not terminal weakness.
As the Guardian newspaper’s economic editor Larry Elliot wrote: ‘In normal circumstances, news that the UK economy had contracted by 1.5% in the first three months of 2021 would be considered deeply concerning. Falls of that size only tend to happen in the most severe recessions.’
However Elliot was quick to reassure his readers that these months were ‘anything but normal’, citing the coronavirus lockdown forced on the Tories by the massive wave of Covid infections following their lethal reopening of the economy last year.
In fact the reality is the UK economy collapsed last year by nearly 25%, so the further decline of 1.5% has to be added to this already catastrophic fall.
These commentators and politicians are grasping at the straw of a massive ‘bounce back’ of the economy once all covid restrictions are lifted by Boris Johnson in May and June, with the Bank of England (BofE) predicting Britain is set to grow at the fastest rate for 70 years.
What is ignored, is that the rate of collapse of British capitalism has only been slowed by the unprecedented pumping of money into the economy by the Tory government and the BofE.
The UK public sector debt has risen to a record £2.13 trillion by the end of January this year, the equivalent of 97.9% of GDP – with GDP hit by a fall of a further 1.5% this debt is perilously close to 100% of GDP, making the UK officially state bankrupt.
All the promises that the UK economy will rebound ‘like a coiled spring’ leaves out the fact that every week the BofE is artificially creating billions of pounds which it uses to buy government bonds that the Tories use to prop up bankrupt industries and companies.
The BofE now owns almost half of the UK government debt, printing valueless paper money to keep the Tory government from bankruptcy.
The danger is that printing vast quantities of worthless paper money to finance government spending inevitably leads to raging inflation as currencies lose any value overnight.
Recognising the danger of money printing on this scale, Tory chancellor Rishi Sunak has pledged that all financial support will end in September – and what happens then?
The answer is that an estimated 100,000 businesses and companies that have survived entirely on loans and government ‘bounce back’ support are at risk of collapse, putting 10 million jobs at risk.
All those millions of workers still on furlough schemes will face redundancies as employers pack up and close down, unable to pay off even the interest on the debt they have accrued.
Inflation, especially in the US where President Joe Biden has unleashed an unprecedented amount of Quantitative Easing money printing (£1.4 trillion) in an attempt to stimulate the US economy, has sparked fear amongst the stock market speculators.
Stock markets fear inflation as it hits corporate profits through higher costs of raw materials and a massive decrease in the spending power of workers.
In the US and Europe stock market values crashed this week, with one investment analyst saying: ‘The market just can’t shake the inflation fears which are clouding the recovery from Covid.’
A stock market crash on the scale of the Wall Street crash of 1929 is now threatened. Raging inflation, wage cutting and mass unemployment is the only future capitalism holds for workers as the Tories prepare to unleash a huge austerity war to protect the profits of the bosses.
The only answer for workers is to prepare for this inevitable conflict by building a new leadership in the unions that will organise a general strike to kick out the Tories and advance to a workers government that will expropriate the bankers and bosses and bring in a planned socialist economy.
The victory of the Socialist Revolution is the only answer to capitalism’s crisis. This is why the most urgent task is to build up the revolutionary leadership. Join the WRP today!