AMID world stock markets crashing, and the head of the IMF revealing she has ‘sleepless nights’ over the dangerous risks of collapses in the shadow banking sector, business leaders in the UK have repeatedly warned Chancellor Rachel Reeves that tax increases on employers in her November budget would push up unemployment in the UK, already at 4.5 per cent and rising.
IMF head Kristalina Georgieva urged countries to be more vigilant over a ‘very significant shift of financing’ in the lightly regulated private credit market, after the failure of the sub-prime auto lender Tricolor, and the car parts supplier, First Brands in the US.
She told the IMF’s annual meeting in Washington DC that the Fund was concerned about the ‘very significant shift of financing’ from the banking sector to non-bank financial institutions (NBFIs), and that the ‘world could end up in a very difficult place’ as the global economy crashed.
Global stock markets fell sharply and gold hit a record high on Thursday after two US regional banks said they had been left exposed to billions of dollars of bad loans and alleged fraud.
London’s FTSE 100 share index dropped 1.5 per cent as jittery investors turned to safe haven assets, with gold hitting a new record of $4,378 (£3,262) an ounce, a weekly gain of almost 8.5%, its biggest since the 2008 financial crisis.
On Tuesday, the head of JP Morgan, Jamie Dimon, warned: ‘My antenna goes up when things like that happen. I probably shouldn’t say this but when you see one cockroach, there’s probably more. And so everyone should be forewarned at this point,’ he said.
Warnings of more anti-austerity ‘riots and civil unrest’ across Europe were made yesterday by Clarisse Kopff, a board member at global reinsurance. She said it was due to stagnant economic growth.
The IMF this week forecast growth of 2.1 per cent for the US next year, and 4.2 per cent for China. In continental Europe, Spain will be the only major economy to post more than 1 per cent growth, with France and Germany languishing on 0.9 per cent and Italy on 0.8 per cent. The forecast for the UK is 1.3 per cent and 1.2 per cent in France.
Frustration at the paralysed French government’s failure to grip its economic challenges has spilt into the streets. Hundreds of thousands of people joined protests in mid-September, and most major services and industries were crippled by strikes.
There have also been anti-austerity protests in Belgium, and countries such as Germany, Italy, Austria, Spain and the UK have been rocked by large pro-Palestinian demonstrations and strikes.
Starmer’s Labour government has been warned that hitting employers with more tax rises in next month’s Budget will crush the jobs market, with confidence already ‘in free fall’.
Some 56 per cent of employers said they will cut jobs or freeze hiring if the Chancellor raises taxes on businesses again, according to the Institute of Chartered Accountants in England and Wales (ICAEW). The trade body warned that corporate tax rises would put Britain’s ‘growth mission’ in jeopardy.
Joining the fray warning against tax increases for business, Alan Vallance, the ICAEW chief executive, said: ‘The reality is that Britain faces a damaging cliff edge if the Chancellor decides to raid businesses again at next month’s Budget.’
Vallance sounded the warning as the Chancellor scrambled to find ways to raise money without breaching her manifesto pledges to leave income tax rates, employee National Insurance and VAT untouched. Reeves is desperately seeking up to an estimated £50 billion in tax rises, and spending cuts, to plug her fiscal gap!
The UK’s unemployment rate has already risen to a four-year high of 4.8 per cent in the wake of the Chancellor’s increase in employers’ National Insurance contributions, which came into effect in April.
Nearly half of the businesses surveyed said they had already cut jobs or frozen hiring to try to cope with the crisis. Vacancies have now fallen almost uninterruptedly for three years! Unemployment and inflation are likely to worsen if Reeves targets employers once again, the ICAEW survey is warning.
As anti-cuts strikes in the UK public sector emerge, together with mass demonstrations over the government’s vicious anti-immigration policies, alongside huge mass demonstrations against Israel’s genocide in Gaza taking place right across Europe, it is more and more obvious that what is emerging is the European socialist revolution!
The TUC and UK trade unions must take action against austerity and the destruction of the NHS and social services, by calling a general strike to bring down the rotten Starmer government and to bring in a workers government that will inspire the workers of Europe to establish the Socialist United States of Europe and to smash capitalism for ever! Now is the time to build the Workers Revolutionary Party and the Young Socialists to lead the British socialist revolution!
