THE news from the mortgage front is grim. Millions of families are experiencing shocking hikes in mortgage rates of hundreds of pounds per month, as inflation rises and currencies weaken.
The past week has seen a tipping point. There was a bourgeois consensus that a soft landing for the economy was coming, that recession would be avoided, that light was beginning to appear at the end of the tunnel.
This was despite the fact that Germany and the eurozone had entered a technical recession.
Now the bourgeois media is revealing that there is a mass of unexploded ordnance in the UK economy, and there are fears that it will start to ignite, shattering the pound sterling in the coming weeks, forcing a series of rate rises, and massive inflation.
The bourgeois markets are now convinced that the UK is more inflation-prone than other similar economies, and that interest rates will also now have to be much higher over the next two years.
The cost of borrowing for the UK is now higher than it was during the post mini-budget panic over the fiscal credibility of the Truss and Kwarteng administration. Markets believe base rates will go above 5% and stay close to that level into next year.
The Chancellor Jeremy Hunt last week said that ‘we are in a very different situation to where we were last autumn’. The fact that sterling is reaching one-year highs against the dollar is not an expression of the strength of sterling but that the USA itself is on the verge of bankruptcy, and has a man standing for the presidency, who many think will be serving up to ten years in jail.
To the horror of the Tories, top civil servants in the Treasury such as Lord McPherson say that UK interest rates will have to be driven upwards causing massive price increases and a major pre-election economic and political crisis.
Chancellor Hunt was asked to comment on former Tory PM John Major’s dictum on interest rates hikes to deal with inflation that ‘if it isn’t hurting it isn’t working’.
Hunt responded: ‘In the end, there is no alternative to bringing down inflation … that’s why we will be unstinting in our support for the Bank of England.’
Economists now unanimously expect a further rate rise on Thursday. Inflation is expected to have fallen only modestly when the new figure is released on Wednesday, staying above 8%.
However, the crisis is deepening rapidly. The banks are making assumptions about the inflation surge and are therefore pre-emptively pushing fixed mortgage rates higher.
Food inflation is already at its highest level since the 1970s, and yet to come is the new system of post-Brexit border controls on European food imports due to be imposed at the end of the year.
However, the impact of the already considerable series of rate rises is now starting to hit the mortgage market as a mass of homeowners are forced off super-low fixed mortgage deals, many of which were signed two years ago.
The Sunak administration may have hoped that the economic pain of dealing with an inflation shock could be imposed this year. Now Sunak dreads a crisis general election.
The reality is that the Mortgage Bomb is about to explode under Middle Class Britain, with millions of homes in the balance and with people who thought that they had a future reduced to destitution over night.
This is at the same time as the war in the Ukraine is poised to further explode, as the Ukrainians launch their offensive causing the biggest hike in food prices ever and bringing revolution to the EU, the UK and even the USA.
It is in this revolutionary situation that the UK working class has the decisive role to play, organising a general strike in the UK and carrying out the British socialist revolution.
Workers must demand a sliding scale of wages so that wages rise automatically with inflation, keeping starvation at bay. There must also be a sliding scale of hours so that workers do not lose their jobs, with all bankrupt companies being nationalised.
This is the time to go forward to socialism. This is the time to organise sections of the International Committee of the Fourth International worldwide to put an end to capitalism and go forward to the World Socialist Republic.
We urge UK workers to join the WRP today and call on all youth to join the Young Socialists to build up the revolutionary mass movement of youth that will be essential for organising the British socialist revolution!
