PANIC has erupted in the UK government after economic data released on Thursday revealed that UK production crashed to just 0.1 per cent of GDP in the quarter to September, down from 0.5 per cent in June, according to the Office for National Statistics (ONS).
Despite Prime Minister Sir Keir Starmer’s public pledge last year that a Labour government would make Britain the fastest growing economy in the G7 group of leading capitalist economies, the UK’s growth was second from the bottom, at number 6!
The official figures are an exposure of the failure of Labour’s policy of rescuing the stagnant capitalist economy from further collapse into recession, and reducing bank interest rates.
Alarmed by Britain’s long-term economic decline, the Bank of England Governor, Andrew Bailey, told bankers assembled at the Mansion House on Thursday that trade ties with Europe must be rebuilt.
He was clearly rattled by the incoming US President, Donald Trump’s threat to ignite a global trade war by imposing blanket tariffs of up to 20 per cent on the world, and 60-100 per cent on China.
Bailey has urged the Chancellor to see Trump’s trade war threat as a plus and ‘welcome it as an opportunity to rebuild’ post-Brexit relations with the EU. The rats that left the EU’s sinking ship are now desperate to climb back aboard!
Catherine Mann, who sits on the Monetary Policy Committee at the BoE which sets interest rates, said the splintering of the world economy would ‘likely put upward pressure on costs and prices’ and that ‘factors like protectionism, climate change and higher government spending could trigger more unstable inflation in coming years’.
The Chancellor Rachel Reeves responded desperately by calling for ‘free and open’ trade to boost the world economy, while also blaming Britain’s departure from the EU as a key driver of the ‘structural challenges’ facing the economy.
However, as well as forging stronger ties with Europe, she desperately vowed to expand trade links with the US and China amid the backdrop of rapidly rising global tensions.
Attacking the City’s financial rules, Reeves said that: ‘The UK has been regulating for risk, but not regulating for growth.’
She also doubled down on her budget growth strategy following a furious reaction to her £40bn tax raid on inheritance taxes and council taxes, and her cuts in social services.
Council taxes will increase again in April 2025, the Labour Government announced this week. Councils can now raise the levy by a maximum of 5 per cent in 2025-26, adding £110 a year to a typical bill, after Starmer promised a one-year pause just days before taxpayers were hit with a similar 5 per cent council tax rise.
The vast majority of councils will have to put up bills by the maximum amount, as the result of a £2.4bn shortfall in the amount of money expected to be required by local authorities to pay for social care and other priorities next year. The tax raid is expected to raise an extra £1.8bn.
Chancellor Reeves also announced a raid on pensions to pay for investment for growth. The government will merge local government retirement schemes into ‘megafunds’, aimed at pooling financial assets from the 86 separate local government pension schemes (LGPS) in England and Wales into eight funds, worth about £50bn, by 2030.
Grouped together, the LGPS represents one of the world’s largest defined-benefit schemes, with 6.5 million members and £360bn in assets and funds that can then invest larger sums into a wider range of riskier and long-term assets such as infrastructure, startups and private equity.
Acting like brigands, the government claims that it will be part of the ‘biggest pension reforms in decades’, while boosting investment for local areas and national infrastructure.
That this is aimed at reducing public borrowing is obvious, but what is not obvious is that the investment for growth ‘will be mandatory’ and that the charter of pension funds to provide retirement benefits to workers will be used to supply ‘compulsory investment funds for risky government growth’ projects, a policy that will lead to mass bankruptcy!
The scenario is one of a world trade war, complete with explosive international social and economic debt crises wrecking the small, weak and bankrupt economy of the UK.
The trade unions must be forced to reject this race to the bottom. It must call a general strike to bring down the Starmer government, to go forward to a workers’ government and socialism by nationalising the banks and the major industries. Join the WRP today to organise this urgent struggle for workers’ power and socialism!
