Osborne to make £11.5bn spending review cuts!

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ON a day during which it was announced by German bankers that Cyprus’ banks may never open again, and by the ONS that UK unemployment numbers were up, especially for youth – to the brink of a million – the UK Chancellor of the Exchequer announced another £11.5 bn of savage cuts in the current Spending Review. He also announced wage freezing for the public sector up to 2016, by which time public sector wages will amount to a pittance, taking into account the way that inflation is surging forward.

In fact, Osborne was forced to mention Cyprus in his speech, remarking that the re-emergence of the banking crisis was clear evidence that the world crisis was not over, and that the world economy was ‘very fragile’.

He had no alternative but to begin his Budget statement by telling MPs: ‘Today, I’m going to level with people about the difficult economic circumstances we still face and the hard decisions required to deal with them.’

An indication of these circumstances was the ONS statistic that between November 2011 to January 2012 and November 2012 to January 2013 total pay and regular pay rose by 1.2%. However, as inflation measured by the Consumer Prices Index was 2.7% between January 2012 and January 2013, this was in fact a big cut in the real value of pay.

Meanwhile, the ONS also showed that there were 8.95 million economically inactive people aged from 16 to 64 in the UK, a real indictment and exhibition of the crisis of the diseased British capitalist system.

Osborne dealt with this situation by outlining tax cuts for the rich, with his pledge to cut the main rate of corporation tax to 20 per cent – the joint lowest level in the G20.

He announced that he was giving businesses and charities entitlement to a £2,000 per year employment allowance towards their employer National Insurance Contribution (NICs) bill, from April 2014.

There was to be a £5.4 billion package of financial support to tackle long-term problems in the housing market including the launch of Help to Buy – which offers two schemes aimed at helping those who want to get on, or move up, the housing ladder.

There was an additional insult for the masses, a penny reduction in the price of a pint of beer.

He also announced that he was taking forward Lord Heseltine’s recommendation on the creation of a Single Local Growth Fund which would set up joint enterprises to replace the local public sector at cut price wages. This is a Tory privatising initiative that the TUC associates itself with, without even bothering to find out whether Osborne and Heseltine are going to allow the recognition of trade unions.

Deep in the gloom of the capitalist crisis, Osborne was forced to cut his official growth forecast in half, saying that growth in 2013 would be 0.6% – half the 1.2% he predicted four months ago in his autumn statement.

He agreed that it was taking much longer than expected but ‘we are, slowly but surely, fixing our country’s economic problems’.

The scale of the disaster that is hitting British capitalism was shown when he issued his revised forecast for the UK National Debt, that it would rise to 85% of GDP and not start coming down until 2017/18.

He announced that the Bank of England Monetary Policy Committee had also been given an updated broader remit, but keeps its 2% inflation target, a joke in itself!

The Chancellor extended the 1% public sector pay cap by one year to 2015/16, and also announced £2.5bn of spending on infrastructure paid for by a further squeeze on public spending. Details of where the axe will fall, destroying hundreds of thousands of jobs will come in June, when the government unveils its spending review.

Osborne’s fourth budget has revealed the hopeless situation of the British capitalists, and their determination that the working class will be made to pay for every last penny of the crisis.

Like a decrepit, diseased but dangerous animal, British capitalism must be put down with a socialist revolution before it inflicts any more damage on the working class and the middle class.