BRITISH capitalism is officially in recession as the Office for National Statistics (ONS) reported yesterday.
In just three months, the UK economy shrank at a rate even faster than that it achieved at the peak of the 2008 world banking crash.
The UK Gross Domestic Product (GDP) fell by 2% in the first quarter of 2020 but even this was eclipsed by the collapse in the country’s output in March when it fell by a staggering 5.8% even before the coronavirus lockdown came into effect, the biggest monthly fall on record.
In one month UK GDP fell by almost as much as the 6% drop that hit the economy over a period of one year following the 2008 crash. The next three months up to June will be even worse, with output predicted to fall by up to 20% or more, putting the UK economy firmly into a slump.
UK manufacturing and service industries that were crashing even before the pandemic hit, have been all but totally annihilated. Motor industry output collapsed by over a third as factories closed down, while travel and tourism industries fell by nearly a half.
Not even the Tory chancellor Rishi Sunak could put much of an optimistic spin on these disastrous figures, telling Sky News yesterday: ‘Technically a recession is defined as two quarters of negative GDP, we’ve now had one…so yes, it is now very likely that the UK is facing a significant recession at the moment and this year, and we’re already in the middle of that as we speak.’
The Bank of England had already warned that the UK economy is plunging into the sharpest recession on record, even if the lockdown is completely lifted by the end of September.
While capitalism is being ripped up by recession it is also facing a massive debt crisis that has been hugely exacerbated by the furlough scheme, introduced by the Tories to try and prevent a revolutionary uprising as millions of workers were being laid off by the pandemic.
This week, Sunak extended the scheme under which the government pays 80% of furloughed workers’ wages until October. 7.5 million people from 900,000 UK businesses are now furloughed at the cost of £100 billion to the public purse by the autumn.
So far £10 billion has been spent to avoid a complete economic meltdown resulting in these 7.5 million being thrown out of work.
The fear that mass unemployment on a scale not seen before will lead to revolution, has led to the Tories spending billions to keep businesses going, while at the same time facing the prospect that if the vast debt is not repaid, out of the superexploitation of the working class, then Britain faces the same future as Weimar Germany, with its gigantic inflation and the middle classes begging in the streets.
Yesterday the Unite trade union had to warn the Tories of the consequences of bringing in a public sector wage freeze, that would make the working class very angry indeed.
In fact most of these companies and industries will never re-open, just hang on as long as they get taxpayer money to subsidise laying off the workforce, and when it runs out they will simply close down permanently.
Apart from the 7.5 million furloughed, millions more are being forced onto benefits – more than 27 million people, over half the adult population, rely on benefits to survive.
The ruling class have no alternative but to organise to pay back this massive increase in the national debt out of the hide of the working class.
According to a document leaked by the Daily Telegraph, the government is discussing massive increases in income tax across the board for pensioners and workers, along with increases in VAT, to pay off the debt run up to keep bankrupt capitalism from going under.
The scene is being set for the British socialist revolution. The question of the hour is the building up rapidly of the revolutionary leadership of the working class, the WRP and the Young Socialists, to lead the British socialist revolution, and then to ally with the workers of Europe to smash the European Union to go forward to the Socialist United States of Europe.