AS THE END of the Tory furlough scheme looms, the reality of millions of workers being thrown on the scrapheap in the coming months is causing fear amongst the bourgeoisie and the trade union bureaucracy and a massive tide of anger in the working class.
In an effort to dampen down the panic, the Bank of England issued a Monetary Policy Report that tried to strike an optimistic note when it forecast that things aren’t that bad and unemployment would only reach 2.5 million when furlough ends!
In fact, this stands in contrast to the Office for Budget Responsibility which predicts 3.5 million out-of-work while other analysis points to over 4 million when furlough finally ends in October.
This optimism was further undermined when the Bank’s governor Andrew Bailey admitted that negative interest rates were under active consideration.
Having exhausted pumping money into the economy through Quantitative Easing and bringing interest rates down to the historically low near-zero rates bringing in negative rates is the last desperate option being considered.
Instead of banks paying interest on money loaned to them, under negative rates investors would be charged for the privilege. The idea behind this desperate measure is that investors would then be forced to invest in industry and businesses rather than being charged for parking their money in bank vaults.
Investors have already voted with their feet by turning to gold rather than invest in companies that produce no profit and are closing up once furlough ends.
When negative rates were first considered after the 2008 world banking crash, the Bank of England rejected them out of hand, warning that it would bankrupt the banks and drive them to the wall.
So desperate is the economic crisis of British capitalism that now what was once unthinkable has become a real prospect.
With no prospect of any escape from a massive crash, the demand now is for the Tories to extend furlough to put off the day of reckoning with the working class.
This was expressed forcibly in an article in yesterday’s Daily Telegraph which warned: ‘Britain is heading for an unemployment crisis of biblical proportions by the end of the year unless the Treasury’s policy is torn up very soon.’
This article by the paper’s chief economic writer Ambrose Evans-Pritchard went on with the stark warning that: ‘Businesses will start “shedding” jobs rapidly in September as the furlough scheme dials down to 70 per cent of wages.
‘It will reach a grim crescendo when support stops altogether at the end of October, long before the economy is in any fit state to absorb the army of unemployed.’
It goes on to note that: ‘Only half of the 9.6 million furlough jobs have so far come back. There must be a high risk that premature fiscal tightening will abort the recovery and lead to bitter social conflict, spelling the political death of this government.’
The trade union bureaucracy is also terrified that the working class have not been softened up enough to submit to mass unemployment and poverty as the price for keeping capitalism on life support.
TUC general secretary Frances O’Grady joined yesterday in urging the government to abandon its plan to end the furlough scheme in October, to prevent unemployment shooting up. O’Grady said: ‘That means extending the Job Retention Scheme for businesses in hard-hit sectors like retail, manufacturing, and aviation.’
The trade union bureaucrats have joined with the capitalist class out of fear that the working class will refuse to accept mass unemployment and starvation but will rise up, spelling not just the political death of the Tory government but an end to capitalism itself by seizing the power and going forward to socialism.
The conditions are ripe for building a new revolutionary leadership in the unions to kick out these bureaucrats and immediately organise the massive strength of the working class in a general strike to bring down the Tories and replace it with a workers government.
A workers’ government will expropriate the capitalists and advance to a socialist planned economy.
Only the WRP is building the leadership required – join today.