THE International Monetary Fund (IMF) has cut its growth forecast for Britain for the third time in nine months and warned George Osborne that further ‘under-performance’ will require a policy U-turn.
However, a U-turn, and an attempt at inflating the dying UK economy, thereby massively increasing the UK’s debt, is exactly what Osborne and Cameron are pledged not to do.
They prefer to see deflation and more and more bankruptcies, as the economy further declines, and the slump deepens, with government spending still rising to sustain more and more workers on the Jobseekers Allowance. Their solution to this is a permanent war on wages and benefits, cutting both to try and slash spending, creating a nation of paupers.
The IMF cut its growth forecast for the UK to 1.1% this year – down from 1.5% in June, 1.7% in April and 2% at the start of the year. It also predicted a more sluggish recovery in 2012, with activity expanding by 1.6% against the 2.3% it was predicting just three months ago.
This now seems to be a super-optimistic position.
However, public borrowing is growing and not declining, despite the savage cuts policies. It reached £15.9bn in August, up £1.9bn year-on-year and the highest figure for the month since records began in 1993. The figure excluded all the financial interventions such as bank bail-outs.
Current net borrowing since March is at £51.5 billion, down £3.9 billion on the same period the previous year, while the government is aiming to reduce its deficit to £122 billion this year! Truly the most savage cuts will be necessary to get anywhere near this figure.
Then there is the world crisis whose back-breaking impact the UK cannot avoid.
The International Monetary Fund report warned that the global economy is in a ‘dangerous new phase’, and that ‘Global activity has weakened and become more uneven, confidence has fallen sharply recently, and downside risks are growing.’
It also issued a ‘call to arms’ to Europe to ‘get its act together’ or else lose all control of the crisis, with the implication that the Euro-zone could collapse, bringing down the EU and UK banks.
The IMF warned that the combination of the failure to tackle Europe’s sovereign debt crisis and the continuing policy crisis between Democrats and Republicans in the US could result in a double recession for the developed world, and a deep slump of a type that the world saw in the 1930s.
This slump was the breeding ground for the Second World War.
As this crisis was emerging yesterday, TUC general secretary Brendan Barber spoke up, confining himself to the immediate British crisis. He said that the UK growth downgrade by the IMF was ‘a further blow to Government economic credibility’, and that ‘Calls for a plan B are growing. The Chancellor must change course before he causes even more damage to the economy.’
However, the choices facing the bourgeois parties are few. It is either to be an inflationary binge, setting the scene for huge price increases and a total collapse of the currency and the banks; or more and more savage cuts in wages and benefits, leading to a deep slump, with massive unemployment.
These alternatives will be alongside opportunist wars, such as the war on Libya to try and grab other people’s assets, a process that can only lead to a greater war for the redivision of the planet.
For the working class there is only one way forward. This is to organise a general strike to bring down the coalition and bring in a workers government, not a Labour government, that will expropriate the bosses and bankers and bring in a socialist planned economy, as part of the world socialist revolution.