THIS WEEK the Tories were warned by leading financiers and bankers that a quarter of a million firms in the UK will be crushed under the weight of massive debt taken on to survive the coronavirus crisis.
The report sent to the Treasury and the Bank of England spells out that three million jobs will go unless ‘radical action’ is taken to stop the wholesale closure of firms as the banks start to demand repayment of the billions handed out in the form of emergency loans.
Under the Tory rescue plan for small businesses, high-street banks were encouraged to lend vast amounts with the guarantee that if the firms defaulted, the banks’ losses would be covered by the taxpayer.
The sting in the tail of this guarantee is the requirement for banks to vigorously pursue the debt before they could come to the government begging for the cash to cover their losses.
These firms will go bankrupt immediately after furlough ends. Three million workers will be thrown out of their jobs while the banks will be left holding billions of pounds of toxic debt waiting for the Tories to repay them.
The fact is that the banks cannot stand any more toxic debt on their balance sheets; they were already overloaded with it, even before the coronavirus pandemic.
The scale of corporate debt is massive across the world, with Britain leading the way in Europe for having the highest number of ‘zombie’ companies – indebted companies surviving only through debt.
With these companies now going bust, a perfect storm is upon capitalism – the collapse of industry and business sparking the inevitable collapse of the entire banking and financial system.
Unlike the world banking crash in 2008, this time the crisis is so great that it cannot be put off with bail-outs paid for by austerity attacks on the working class but can only be staved off by a ruthless war by the capitalist class against workers.
The immediate prospect of four million workers thrown out of their jobs, mass unemployment and the collapse of businesses from giant aviation corporations to high street shops is haunting the bourgeoisie.
One thing glaringly obvious to them is that the Johnson government, despite sitting on an 80-seat majority, is incapable of waging the war against workers that is necessary to keep capitalism struggling on.
Johnson is daily being held up to ridicule even in the loyal Tory press as a hopeless buffoon while sections of Tory MPs are rapidly concluding that he is not strong or fit enough for the job.
His weakness was displayed this week, when despite packing the powerful Intelligence and Security Committee with Johnson loyalists, his chosen chair of the committee Chris Grayling was defeated by fellow Tory MP Julian Lewis who, without informing Johnson of his plans, stood at the last moment and won with the votes of Labour and SNP members of the committee.
In a petulant display of weakness, Johnson immediately threw Lewis out of the parliamentary Tory party to cover his humiliation.
With Johnson not up to the job, the capitalist class must turn to a new form of dictatorial rule to impose the crisis on the backs of a powerful working class that will not passively accept mass unemployment and destitution as the price for saving capitalism.
The crisis has created a revolutionary situation where the ruling class can no longer rule in the old way.
Equally, the working class cannot live in the old way. They certainly can’t live any longer with leaders in the Labour Party and trade unions who refuse to fight for workers, instead, continually begging to be allowed to join with the Tories and bosses to help them impose the capitalist crisis on workers and youth.
These leaders must be thrown out and replaced by a new leadership that will organise strikes and occupations to defend every job and all the gains made by workers in the past and take action by calling a general strike to kick out the Tories and go forward to a workers government and socialism.
Only the WRP is building this revolutionary leadership – join today!