Wednesday, April 25, 2012

Economic crisis meets disillusioned voters

Coalition Chancellor Osborne says that economic “recovery” is taking longer than expected, but this is a deliberate deception because all the indications are that recession in the UK is part of an international trend.

This is accentuated rather than slowed by government austerity programmes under the cosh of the financial markets, the IMF and the European Central Bank.

If conditions in Europe are anything to go by – and they most certainly are – the world economy is in an uncontrollable downward spiral.

The Office for National Statistics says Britain's annual output (GDP) fell 0.2% in the first quarter of 2012 after contracting by 0.3% at the end of 2011, putting the economy back into recession. Since these are provisional figures, it may well be a lot worse

On Monday, a Bank of Spain report showed gross domestic product in that country falling 0.4% in the first three months of 2012, adding to a 0.3 %  contraction in the previous quarter. Unemployment is 23% and growing. A continuing fall in property prices is choking the supply of bank credit as lenders are forced to make provision for increasing quantities of bad loans.

The Bank of Greece forecasts the Greek economy will shrink by about 5% this year – the fifth consecutive year of contraction. This year’s contraction comes after a 6.9% drop in 2011 and a cumulative shrinkage of more than 13% since 2008. Unemployment is to set to put one in five Greeks out of work this year.

Many private sector workers are facing wages delays as 300,000 companies do not pay salaries on time because of a drop in sales and scarce funds. Their pay is also plummeting by over 15%. Greece had one million companies in 2009, but 250,000 have since closed.

In Germany, which has carried the burden of the eurozone debt crisis, manufacturing output is shrinking at the fastest pace since 2009 while further spending cuts are on the agenda in France and Italy.

In the UK, public sector workers whose salaries have been frozen whilst inflation surges are the sharp end. A million young people are without work, condemned to becoming a lost generation.

With the ConDem regime staggering from one political crisis to another and becoming increasingly unstable, it is not surprising that only 24% now believe the current system of coalition government is working, according to the Hansard Society’s latest survey.

Dr Ruth Fox, director of the Hansard Society's parliament and government programme, said: "2011 was one of the most turbulent and momentous years in recent history, but it appears that the economic crisis, the summer riots and phone hacking did not lead to any greater interest in or knowledge of politics.” She added: "The public seem to be disgruntled, disillusioned and disengaged.”  The survey showed:

* 42% of people said they were interested in politics - down 16% on 2010 and the lowest figure since the audit was first carried out
* 48% of people said they would definitely vote if a general election was called tomorrow - down 10% from last year and again, the lowest figure in the audit's history
* 30% said they were unlikely or absolutely certain not to vote - up 10% from 2010
The collapse of the Dutch government and the rejection of the major parties by voters in France are European-wide indications that, as one leading economics commentator put it, “the street might overwhelm the establishment”.

So, the economy is broken and people have lost faith in the political system. Now is clearly the time for a sustainable, not-for-profit economy that is freed from the need to “grow” directed by a new system of democracy based on a global network of Peoples Assemblies.

Gerry Gold
Economics editor

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