THE pound crashed to its lowest level ever against the dollar yesterday morning threatening that it will soon reach parity with the US currency.
Sterling plummeted by almost 5% reaching a low of $1.0327 early on Monday morning after the Asian money markets opened overnight to a massive sell off of the pound by the international currency speculators.
The pound fell dramatically after Tory Chancellor Kwasi Kwarteng’s ‘mini budget’ which gave massive tax cuts to the rich and the biggest increase in government borrowing in over 50 years.
At least £150 billion is to be borrowed to guarantee the profits of the oil and gas companies – a debt to be paid for by the working class while the bosses enjoy billions in tax cuts and no cap on their bonuses.
The realisation that British capitalism is in the middle of a massive collapse with no way out except to pile up astronomical debt was deepened on Sunday when Kwarteng pledged even further tax cuts in the full budget later this year.
The attitude of the money traders who buy and sell currencies on the international market was summed up by David Madden, a market analyst at Equiti Capital, who told the Guardian newspaper: ‘Sterling is in the firing line as traders are turning their backs on all things British. There is a creeping feeling the extra government borrowing that is in the pipeline will severely weigh on the UK economy.’
The defenders of Kwarteng’s dangerous gamble to try to ‘save’ British capitalism through a massive unsustainable debt mountain have claimed that the fall in sterling against the dollar is a reflection of the strength of the US dollar rather than the terminal weakness of the pound.
But it wasn’t just against the dollar that the pound plunged. As the Daily Telegraph reported: ‘Highlighting the dire outlook, the pound fell against every single other currency in the world, from the Albanian lek to the Zambian kwacha.’
No wonder the currency speculators are selling the pound like mad and desperately buying up dollars which they consider a safer bet – which is not saying much as even Albania and Zambia are a safer bet than British capitalism.
While finance capitalists charge around the world looking to increase their fortunes, the working class at home will be bearing the cost of this currency crisis.
The fall in sterling will immediately drive up the cost of all imported goods and services.
Both oil and gas are priced internationally in US dollars, meaning the price of these will be forced up. The UK imports over 50% of its food and the cost of all these goods will increase, driving the cost of living crisis for workers even higher.
It doesn’t end there either, as what is left of UK manufacturing relies on imported components from across the world. The crash of the pound is adding even more fuel to the inflationary fire that is consuming British capitalism.
At the same time, the Bank of England is in a state of panic with speculation rife that there will be an emergency meeting of its Monetary Policy Committee to hike up interest rates again, in a desperate attempt to prevent the complete collapse of the pound and the entire UK capitalist economy with it.
In fact, increasing interest rates will only drive inflation and the cost of borrowing even higher.
The working class has shown its determination not to accept being driven into poverty, unable to feed their families or heat their homes, in order to bail out the ruling class and capitalism.
There can be only one solution to this historic crisis, and that is for the working class, the most powerful force in society, to take action and put an end to a capitalist system that has reached the end of the road, and replace it with socialism.
The working class must lobby the TUC Congress on Tuesday 18th October in Brighton and force the TUC to call a general strike to kick out the Tories and bring in a workers’ government that will expropriate the bosses and bankers and build a socialist planned economy.
This is the only way forward today.
