SHOP sales in May were only 1.4 per cent up on the same month in 2005. Comparing the same products and shops, sales were actually down by 2.4 per cent on a year ago, according to figures published by the British Retail Consortium (BRT) yesterday.
This prompted BRT Director Kevin Hawkins to warn businesses and the government: ‘While some analysts still claim that continuing weakness in retail sales is only a “blip”, these figures should remove any lingering doubt that we are now in a consumer-led retail recession.’
He added: ‘There has been little or no improvement in any sub-sector of the retail industry and some are reporting a further deterioration.’
Hawkins then pleaded with the Bank of England (BoE): ‘We urge the Bank of England to reduce interest rates at this week’s meeting.’
The BoE Monetary Committee will meet today, ahead of the Office for National Statistics publishing its official figures for retail sales in May. The committee will consider whether the BoE base rate will stay at 4.75 per cent, or whether it should be raised, or lowered.
This latest news that retail sales are dropping is bad news for Prime Minister Tony Blair and his Chancellor Gordon Brown. During the general election they pointed to retail sales as a sign that British capitalism was doing better than its European rivals.
The reality is the opposite.
The base of the domestic capitalist economy in Britain, manufacturing industry, is in terminal decline, with job losses running at more than 5,000 a month. Only the thousands lost at Rover and big firms like Marconi hit the headlines, but jobs are haemorrhaging across industry.
The Engineering Employers Federation (EEF) cut its growth forecast for this year from 1.4 per cent to just 0.5 per cent, yesterday.
The EEF blamed the record high price of oil at more than $55 a barrel, the high exchange rate of the pound, stagnation in the eurozone and the slump in retail sales, for near zero growth.
The ruling class of British imperialism are caught.
While the retail trade is calling for a cut in interest rates, the BoE and the big boys within the British capitalist class (the banks, oil giants, defence companies and pharmaceuticals) know that this could spell disaster.
With personal debt running at more than £1 trillion and property prices out of reach for millions of families, cheaper credit will only fuel the speculative bubble preparing for an even more explosive collapse.
An interest rate cut will trigger inflation and a precipitous fall in the exchange rate of the pound.
Britain already has the biggest trade deficit in Europe, with imports outstripping exports by billions every month.
A weak pound will mean that Britain’s import bill will sky-rocket making oil and all other raw materials even more expensive for its import-dependent economy. The bankers and monopolists would rather see shops boarded up and sprouting ‘To Let’ signs.
There is no ‘economic’ manoeuvre out of this crisis of British imperialism, which is both a part and a victim of the world crisis of capitalism. The ruling class and their government, the Blair regime, know this.
This is why the weakened Labour government is forging ahead with its war on the working class, with the axing of jobs and the ‘reform’ of public services – dismantling and stepping up the privatisation of the National Health Service, education, local council services and housing.
In the midst of the trade union conference season, workers must demand their union leaders fight to defend every job and take mass industrial action against privatisation.
Those who refuse to do so must be removed and replaced with those who will. Workers must join the Workers Revolutionary Party which is organising this fight in the unions.
It’s urgent now that the unions be mobilised in a general strike to bring down this bosses’ government and replace it with a workers’ government, which will nationalise the banks and monopolies, and lay the foundations for a socialist planned economy.