UK economic growth ground to a halt between April and June, according to the latest official data from the Office for National Statistics (ONS) which revised an earlier estimate of 0.2% growth downwards.
The ONS said that the latest zero growth figure put an end to 63 consecutive quarters of growth in the UK, and meant that the UK economy was already in recession.
The TUC yesterday responded by demanding a cut in interest rates saying that growing unemployment was a greater danger than inflation.
The services sector, which is now the backbone of what was at one time an industrial economy, grew just 0.2%. Manufacturing output fell by 0.8%, while household spending dropped by 0.1%.
The opponents of rate cuts said that they were the surest way to return to a 1970’s inflation rate, when both inflation and interest rates reached plus 15% levels.
There is no doubt that the approach of such interest rate and inflation rate levels will touch off a massive and unstoppable run on the pound, since Britain is now a debtor nation with £1.4 trillion of domestic debt, bigger than the country’s gross domestic product!
Rate rises, on the contrary, will bring a stronger pound, along with a million more unemployed to start with, and a hundred thousand repossessions, and a flood of bankruptcies.
However, as the bankers say, the country would ‘not be living beyond its means’, that is the levels of misery and poverty which is all that modern capitalism has to offer.
The British economy is being hit by both a recession leading to a slump, and hyper inflation leading to a collapse of the pound, caused fundamentally by the failed Iraq war and the major inflation in oil prices that it has caused, leading on to a massive explosion of all energy, metal, and food prices.
This contradiction has left the Bank of England’s monetary policy committee with no wriggle room, and afraid to either cut or raise interest rates.
Meanwhile prices are increasing at in incredible rate.
Energy firms E.On and Scottish and Southern Energy have today raised gas and electricity prices by up to 29%.
Scottish and Southern have announced a 29.2% increase in gas bills, with electricity tariffs up by 19.2% on 25 August.
E.On’s boss said yesterday: ‘I’m very aware of the effect that today’s announcement will have on our customers and I recognise that this is a very tough time for everyone.’
However this is E.On’s second price rise for domestic customers this year. In February it put up gas bills by 15% and electricity tariffs by 9.7%.
In an earlier round of price rises in July, EDF Energy put up gas prices by 22% and electricity prices by 17%. Shortly afterwards, British Gas put up gas bills by a record 35% and electricity tariffs for its customers by 9%.
The number of households in ‘fuel poverty’ ie shivering in the dark, is set to rise to above five million.
The working class is being told that it will have to just grin and learn to bear the pain since a real increase in its wages, pensions and benefits will be ‘inflationary’.
However, the trade union leaders are already pleading with the employers and the government to talk to them, since they will not be able to hold the angry masses back for much longer.
Workers need a programme for the crisis, and a leadership that is willing and able to resolve the crisis of capitalism in the interests of the working class and the middle class.
The programme must be that the unions draw up their own cost of living index, to record increases in working class necessities, and demand increases that match the increases in that index. This is the only way to protect living standards.
There must be no mass sackings; there must be work sharing with no loss of pay. Where bosses refuse to do this, they must be nationalised.
The repossession of homes must be stopped by the nationalisation of the banks and the abolition of mortgage debt.
The trade unions must call a general strike to bring down the Brown government, to bring in a workers government that will carry out socialist policies and put an end to capitalism.