THE bourgeois propaganda machine was all set yesterday to spin an expected 0.04 per cent increase in GDP into a ‘the slump is over’ celebration, when the absolute opposite happened, a fall in production of 0.4 per cent over the last three months to September.
They are now celebrating an entirely different achievement – the first time GDP has contracted for six consecutive quarters, since quarterly figures were first recorded in 1955.
Some had expected a quarterly growth of 0.2 per cent, and had ignored or brushed off the fact that government statistics have shown a 2.5 per cent decline in industrial output in August.
This leaves the British capitalist economy the most slump hit of the leading EU states.
A feature of the current slump is the continuing decline of the service sector of the economy with the distribution, catering and hotels sectors in a state of collapse.
It was Mrs Thatcher and the Tories who set out to de-industrialise the UK by closing down the mining industry, and then manufacturing industry.
She argued that all the UK needed was the banks and that these super-exploiters of the world economy would provide the UK with super profits, which would then trickle down to reach the masses who would all be working in service industries on the minimum wage or the equivalent.
She never asked the question what would happen when the banks collapsed.
Her followers Blair and Brown carried on her policy under their three Labour governments.
They glorified globalism, and said that manufacturers who could not make big profits in the UK should export their businesses to the cheap labour areas of the planet.
Britain was to survive on what they called the knowledge economy, although they never defined just what this was.
What kept the British economy going was debt. The government urged the UK population to borrow from the banks, in order to spend, and that this was a patriotic duty.
When the crash came, and the British banks went bust, their policies, their bourgeois illusions and their bourgeois society went bust with them.
Now with the annual budget deficit approaching £200 billion, all bourgeois parties are arguing that there must be tax rises, wage cuts, benefit cuts, pension cuts, and increases in VAT – not policies that are conducive to recovery from a slump.
The UK economy has now contracted 5.9 per cent from its peak before the recession began.
The immediate impact of the continuing slump will be a weakening of sterling, and the Bank of England further increasing the indebtedness of British capitalism by resorting to the printing press to produce billions more notes to try and bribe the banks into lending money.
The HSBC bank commented yesterday that ‘Back in August we had a worse-than-expected second-quarter GDP number and that is the reason that the Bank of England extended the quantitative easing programme.’
The £175bn already announced for the quantitative easing programme is expected to be spent in the next week.
The likelihood is that there will have to be an emergency meeting of the Monetary Policy Committee.
Its next meeting is not due till November 4th meaning that for an entire week the bank will have no extra cash to pump into the economy.
This is British capitalism, once the major capitalist power, now living on a week by week basis, via the printing press and monetary easing.
The only way out of this crisis of a capitalist system that is now in its death agony is through a socialist revolution.