LAST week, the outgoing chief economist at the Bank of England, Andy Haldane, bluntly warned that the rapid increase in inflation would make the massive national debt (standing at an eye watering £2.3 trillion and rising) unsustainable, as interest rates inevitably shoot up.
Servicing this debt will become unaffordable for the government, driving the country into a recession exceeding that of the 1930s economic crash.
Yesterday, Haldane’s warnings were reinforced by the assessment of the official Office for Budget Responsibility (OBR) which starkly told Tory chancellor Rishi Sunak that the UK economy faced a triple threat from the debt time-bomb built up bailing out British capitalism.
The government’s own financial watchdog told Sunak that the soaring cost of the bail-out will make the UK’s debt ‘unsustainable’ if interest rates rise in an attempt to keep inflation down.
The OBR has warned that pledges to deal with the fallout from the Covid pandemic in education and to clear the backlog of untreated hospital patients will cost a further £10 billion a year, presenting a ‘material risk’ to public finances.
Exceeding this £10 billion cost to keep education, transport and the NHS from collapse, is the estimated £29 billion that will be lost as companies, that feasted themselves on the Tory Covid loans to business schemes, default on repayment.
Sunak has left no one in doubt as to his intentions on how to finance the UK’s massive debt – the working class is to pay the price.
Yesterday, the Tories announced they would stick with plans to slash universal credit payments by £20 a week by the end of September.
This £5 billion cut to the poorest families will hit 6 million households and push 200,000 more children below the breadline, charities have warned.
Along with cuts in benefits, Sunak has already imposed a wage freeze on over 1.3 million public sector workers, along with a derisory wage-cutting 1% increase for low paid NHS workers.
In his autumn budget Sunak is preparing to overturn the Tory election pledge of the triple-lock on pensions to ensure that pensioners do their bit in propping up a bankrupt capitalist system by seeing their pensions decline as inflation rips and prices of basic goods spiral out of control.
While workers and the elderly are forced into poverty to pay for capitalism’s crisis no such austerity is being levied on the bosses.
Instead the government debt will be driven even further by bailouts to manufacturing companies. £35 million of taxpayers’ money has been handed to the French/Italian car maker Stellantis, which owns the Vauxhall plant at Ellesmere Port, after the company threatened to close down the site.
This follows reports that the Tories have thrown £100 million of taxpayer subsidies to the giant Nissan motor company to keep its Sunderland plant going and producing electric batteries.
Like the entire collapsing motor manufacturing industry, these companies were preparing to close down until the Tories stepped in to bail-them out with taxpayer money. Multi-million pound bail-outs for bankrupt manufacturing and austerity poverty for the working class to pay for the bosses’ profits.
Of course once the taxpayer subsidies run out and the profits dry up, these companies will either demand more of the same or simply close down.
Either way the working class will be forced to pay – a fact conveniently ignored by the Unite union which declared the bailout of Vauxhall as a ‘victory’.
These leaders have refused to fight for jobs and are now joining the Tories in calling for the working class to accept austerity to keep these industries from collapse.
The only way forward for workers is to remove these leaders, replacing them with a new leadership prepared to organise the working class in a general strike to bring down the Tories, going forward to a workers government.
A workers government will nationalise the major manufacturing industries along with the banks, placing them under the management of the working class not the profit of the bosses and shareholders as part of a socialist planned economy.
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