YESTERDAY nine members of the Bank of England’s Monetary Policy Committee voted to increase the interest rate from 1.25% to 1.75%.
This is the sixth increase in interest rates this year as interest rates have shot up from 0.1% in December 2021 and have now increased by 0.5%, the highest level since December 2008.
The increasingly desperate steps by the Bank are an attempt to put the brakes on inflation that is spiralling out of control and which, it now warns, will soar over 13% by the end of the year.
The Bank warned that families faced recession and soaring prices, while it expected average take-home pay to be cut by 3.5%.
The hope is that driving up the cost of borrowing will encourage people to borrow less and spend less and that this will magically slow inflation down.
In fact the increase in the cost of borrowing will have absolutely no effect on the soaring cost of gas and oil and make no impact on the cost of food and all the essentials workers need to feed their families and heat their homes.
What it will do is drive up the cost of mortgages and the interest charged on credit cards, bank loans and all other forms of borrowing at a time when the number of people forced to take on debt just to pay energy and food bills has shot up and wages are being cut by 3.5%.
Tens of millions of workers and the middle class will have their lives destroyed, as interest rate increases do nothing to halt inflation but just accelerate the crash into recession.
Having exhausted all the weapons in its economic arsenal to rescue British capitalism from the twin grip of inflation and recession, the only way out for capitalism is to try and make the working class pay for its crisis.
This week Tory leadership candidate Liz Truss revealed her plan for regional pay boards to slash pay across the entire public sector by banning national pay negotiations.
Truss had to publicly scrap this policy in the face of a massive backlash, but there can be no doubt that this is precisely what a Tory government will be attempting – to take on the working class and its unions to drive them back to the poverty of the 19th century.
Truss is trying to emulate her hero Margaret Thatcher who is revered amongst Tories for taking on the miners’ union, the NUM, in a year-long strike of 1984-85, in a carefully planned attempt to destroy the entire trade union movement.
But this is not the 1980s when British capitalism had all the wealth and resources of North Sea oil at its disposal to wage this war, along with a well-thought-out strategy involving long-term stockpiling of coal along with supplies of scab coal from the Stalinist regime in Poland.
Despite all this the miners were not defeated by Thatcher but betrayed by a TUC leadership that worked night and day to keep the massive support for the NUM amongst workers under control, while secretly collaborating with Thatcher to undermine the strike.
Today the situation for capitalism is dire with North Sea oil revenues long gone and a Tory party in a state of disarray, choosing between two untried and inadequate leadership candidates with no preparations, strength or strategy to take on and defeat a powerful mass movement of workers rising up against being driven into poverty by a bankrupt capitalist system that deserves to be dumped into history’s dustbin.
With no way out but to wage a war on workers and the unions from a position of economic and political collapse, the Tories are going into battle from a position of the greatest weakness.
The time is ripe for the working class to seize the moment and put an end to the Tories by demanding the TUC organise a general strike to kick them out.
If the TUC will not make the call the TUC general council must be made to resign, to make way for a leadership that is prepared to use the huge strength of the working class to bring down the Tories and bring in a Workers Government. This will nationalise the banks and the major industries to go forward to a planned socialist economy, putting an end to the anarchy of capitalist production for all time.
Time to dump capitalism into the dustbin of history!
