THE UK parliament returned from the summer holidays on Monday and Labour prime minister Keir Starmer immediately caused a meltdown in the economy.
The immediate cause was Starmer’s ‘reshuffle’ that effectively sidelined his Chancellor Rachel Reeves just before Labour’s Budget next month.
This has been described as a ‘make or break’ budget for Starmer’s government and he clearly has no faith in the ability of Reeves to deliver the massive cuts to public spending that the capitalist financiers are demanding.
Reeves has been blamed by Starmer for the humiliation his leadership suffered in July at the hands of a rebellion by Labour MPs over plans to impose massive cuts to the welfare state, including ending benefits for the sick and disabled.
This rebellion forced Starmer to make a humiliating U-turn that reduced Reeves to tears on the floor of the House of Commons.
Instead of sacking Reeves, Starmer has decided to wrest control of the nation’s financial affairs by appointing a number of economic experts from the Treasury to act as his advisors in running the economy.
If Starmer believed that taking personal control of a UK capitalist economy crashing into bankruptcy would inspire renewed confidence amongst the world bankers and hedge fund speculators then he was completely deluded.
What the international financial vultures – who buy up government bonds and provide the cash to keep British capitalism from going bust – saw was an unstable Labour government reeling from one crisis to another and unable to fulfil its cast iron pledge to bring down the national debt by slashing spending on the welfare state, pensions and benefits.
Their reaction was swift as these financial institutions immediately drove up the interest they charge the government for financing its debt as investors demanded increased payment on what is now considered a ‘risky’ investment.
The interest rate of 3-year UK government debt hit 5.680% yesterday morning – the highest level since 1998 – as lenders demand a higher rate of return on their investment.
Previously, buying government bonds was seen as a safe method of making profit as the thought of a large capitalist economy going bankrupt and defaulting on its debt was dismissed as impossible.
But today the impossible has become a reality, and the slightest sign of instability or chaos provokes these speculators to run for the hills.
The interest rate on government debt shot up as investors piled their money into the safety of gold, pushing the price of gold up to a new record high of $3,508 (£2,607) an ounce yesterday (Tuesday).
Reeves pledged to bring down the UK national debt, currently standing at over £3.2 trillion and increasing by £5,170 per second, but now she has been relegated by Starmer to a bit part role while he assumes the job of driving through the massive cuts to the welfare state that the capitalist class is demanding.
Starmer’s government came close to being brought down over benefit cuts, regarded as trivial by the bankers and speculators, leading them to question what chance does he have of imposing the most savage austerity cuts and the complete destruction of the welfare state and NHS on a working class that has been revolutionised and is refusing to accept sacrificing its lives to keep the bosses and bankers from crashing into bankruptcy.
Starmer’s Labour government is splitting apart under the impact of the world economic crisis of capitalism which is demanding an all-out class war on workers to impose the crisis firmly on their backs.
The immediate task today is for the working class to resolve this crisis by demanding the trade union leaders organise the strength of the working class in a general strike to bring down this Labour government and bring in a workers’ government that will expropriate the capitalist class, and build a socialist planned economy.
Join the Lobby of the TUC in Brighton on Sunday 7th September to demand the TUC call an indefinite general strike to bring down the Starmer government. Forward to a Workers Government and socialism.
