THE Bank of England yesterday raised interest rates by the most in 33 years from 2.25% to 3%, and accompanied its action with a warning, that UK capitalism is facing its longest recession since records began, and that the UK faces a ‘very challenging’ two-year slump with unemployment set to double.
The record rate rise takes borrowing costs to their highest since 2008, when the UK banking system faced collapse and workers faced a dozen years of savage cuts.
This is now revealed to be small stuff as the Bank revealed that the cost of living is rising at its fastest rate in 40 years, leaving millions of households facing a huge crisis, with a 10% plus inflation rate making it impossible for workers to pay for their food, heating, rents or mortgage bills.
The Bank of England is now saying that the ‘downturn’ began in the summer and the Bank now believes the economy will continue to slump next year and into the first half of 2024. In fact the Bank admits that it will be the longest ‘downturn’ since records began in the 1920s.
Bank of England governor Andrew Bailey told his press conference: ‘There is a tough road ahead’, as he admitted that the sharp increase in energy prices ‘as a result of Russia’s invasion of Ukraine’, has made the country poorer, but added that he is convinced that the economy will recover.
He revealed that this was just his personal hope and the truth was that: ‘We cannot pretend to know what will happen to gas prices.’
Bailey added: ‘That depends on the war in Ukraine,’ which the UK and US bosses and bankers are fuelling with massive military aid on a daily basis – since their target is not keeping food and fuel prices as low as possible – but undermining Russia, removing Putin and restoring the power of Anglo-US imperialism which in recent years has become something of a ‘paper tiger’.
Reaching these targets will mean workers in the UK, the US and the EU going hungry and freezing during the winter, with their living standards smashed. In fact the attitude of the ruling class and its bankers is that runaway inflation, hunger and cold for millions of workers, is a price worth paying to undermine Russia, and rescue imperialism from its crisis.
Bailey acknowledged that eight rate rises since last December are ‘big changes and they have a real impact on people’s lives’, but he warned that if ‘we’ weakened and: ‘If we do not act forcefully now, it would be worse later on.’
Chancellor Jeremy Hunt chimed in and said that inflation was ‘weighing heavily on families, pensioners and businesses’ and the government’s ‘number one priority’ was to ‘grip’ it.
He said: ‘The most important thing the British government can do right now is to restore stability, sort out our public finances, and get debt falling so that interest rate rises are kept as low as possible.’
This advice comes as the cost of living is rising at its fastest rate in 40 years, with prices increasing by 10.1% in the year to September.
In fact on November 17th Chancellor Hunt and PM Sunak will be delivering their autumn statement when they will work to impose up to £50bn of savage cuts onto the backs of the working class.
The Guardian recently revealed that the ruling class is preparing for week-long power cuts, as a result of their policies, in which people freeze and go hungry – situations that the capitalist state will have to deal with to prevent uprisings of those who will not tolerate their families freezing and going hungry.
We are told by the Guardian that: ‘The government has “wargamed” emergency plans to cope with energy blackouts lasting up to seven days in the event of a national power outage and growing fears over security of supply this winter.’
The role of troops and police and the operation of martial law during this type of emergency was not dealt with by the Guardian.
This is what we are now on the brink of – massive state attacks to force people to accept huge cuts in their standard of living.
The time has clearly come for the trade unions to take action and to call a general strike to bring down the Tories and bring in a workers government and socialism via the nationalisation of the banks, the oil companies and all of the major industries under workers management. Only the WRP is fighting for this policy and perspective. Join us today to organise the British socialist revolution.
