With UK debt at £2.13tn, BofE is set to let inflation rip!

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THE DECREPIT state of British capitalism has been exposed for all to see. There is borrowing at an all-time high, industry is shutting down, high street shops are closing – while mass unemployment, and homelessness with over five million children in poverty is the new reality.

Coronavirus has exposed all that is rotten at the heart of capitalism and has brought its contradictions to the point of explosion.

Yesterday, the Office for National Statistics (ONS) revealed that the government borrowed £19.1bn last month, the highest figure for February since records began in 1993.

Borrowing for the year so far reached £278.8bn, a record for that period. Total public sector debt has risen to £2.13 trillion, according to the ONS.

Gross Domestic Product (GDP) fell by 2.9% in January when the new lockdown struck. Public sector net debt at the end of January 2021 was equivalent to 97.9% of GDP. At 100% the UK is officially state bankrupt!

And who is going to pay for this enormous debt? The Tory government is crystal clear that its priority is to ‘balance the books’ and it is the working class that will pay a huge price for this.

The Institute for Fiscal Studies (IFS) predicted yesterday that Britain is headed for ‘a new era of austerity’. It said that government spending in most areas is facing an 8% reduction compared with pre-pandemic plans.

In fact, departments are now being lined up for fresh spending cuts. Ben Zaranko, research economist at the IFS, said: ‘Plans can change but, as things stand, for many public services, the first half of the 2020s could feel like the austerity of the 2010s.’

However, the Bank of England yesterday confirmed that it is going to ‘run the economy hot’, in other words let inflation rip, as capitalism races towards the precipice. Bank of England rate setters unanimously voted to hold the base rate at 0.1% on Thursday for the second time this year, to encourage even more borrowing.

The economy will be running hot until it collapses under the weight of its enormous contradictions.

The Bank’s Monetary Policy Committee said it ‘does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the two per cent inflation target sustainably’.

The intention is to run and run until the economy explodes under the weight of its own contradictions, as it did in Weimar Germany.

The Bank of England has just launched yet another £150bn tranche of Quantitative Easing (QE), the modern equivalent of just printing money, a process that produces no value whatsoever, but drives up inflation and deepens the crisis of the capitalist

system.

So the stage is set for a massive showdown in Britain as unemployment and the cost of living hurtle upwards and the value of workers’ wages shrinks.

As inflation is let to spiral out of control, everything in the shops will soar up in price. Gas, electricity, water rates, rent, council tax, everything will go up, which means that workers’ wages will be able to buy less and less. In other words, the wages of every single worker in this country will become more and more valueless, driving millions more into poverty, homelessness and debt.

The working class is not going to accept a return to the conditions produced by the 1929 crash and then the hungry 30s. Workers and their families did not survive this pandemic, in which this government has presided over 140,000 deaths, to go back to the way things were in the 1930s or worse.

This is why the nurses are preparing for their second strike in the history of their RCN union over the Tory government’s ‘pay offer’ of 1%. They are demanding 15% and they must get it.

The working class is gearing up to overthrow capitalism and bring in socialism.

There has never been a better time for the building up rapidly of the WRP and the Young Socialists to lead the developing British socialist revolution.

We urge you to join the WRP and the YS now, and to build sections of the Fourth International worldwide. There is only one way out of the developing crisis of capitalism and that is through smashing world capitalism with the victory of the world socialist revolution!