Today’s autumn statement from chancellor George Osborne will extend the predicted period of the recession and pile more pressure on the 99% of the people in Britain who are struggling to meet rising bills as real incomes fall.
The financial crisis has been as economically devastating as a world war and may still be a burden on our grandchildren according to Andy Haldane, the Bank of England’s executive director for financial stability.
Things are certain to get a whole lot worse.
In 2007, the cost of servicing the post-war ballooning of debt shot past the declining ability of people and businesses to make their interest payments and the crisis struck. Credit-funded growth had reached its limits.
Five years later and the
UK economy is still 3% smaller than
at its peak and set to shrink further as the global depression deepens.
Haldane warned that the banks were still hiding risky assets – bad debts just the same as those that led to the crash in 2007/8. These will have to be admitted, exposed – and written off – before there is any prospect of a recovery.
So Haldane’s comparison of the impact of a world war should be seen as a warning of something much worse to come.
The global depression is spreading, and its path determines the actions of governments whatever their subjective intentions.
Nothing can stand in its path, if the system is to survive.
amongst the first to suffer the effects of the crash, the government is today
introducing a sixth round of cuts and tax increases amounting to €3.5 billion.
This will be added to the €25 billion euros taken out of the economy since 2008
which has resulted in a 15% fall in total output or GDP.
After months of attempts to avoid the inevitable, the Spanish government was yesterday forced to ask for help for the country’s banks and Eurozone finance ministers approved €39.5bn in initially low-interest loans.
But many analysts believe that the amount is less than one-third of what will be needed. And though the government remains in denial, even the full amount of €100 billion being made available is unlikely to prevent the bankruptcy of the country itself.
Whatever the outcome of newly re-elected President Obama’s negotiations with the Republicans to avert the fiscal cliff - the triggering in four weeks’ time of a predetermined $500bn programme in annual tax increases and spending cuts which would push the country back into recession - reining in the unsustainable debt is certain to see trillions of dollars cut from federal spending.
The unfolding of events in Ireland, Greece, Egypt and Syria show that the costs of keeping the for-profit system of production and finance in place are driving millions across the globe over a different cliff. The limits of tolerance have been reached.
Haldane’s comparison with a war is more than symbolic. This is a war – a class war. It is being fought between the majority and the small group who own and control economic and financial resources. In a war there is a winner and a loser.
So we must set off on new path – rejecting the destructive demands of the capitalist economy and replacing it with a system of social relations that sets out to satisfy rather than deny the needs of the 99%. New kinds of democratic decision-making carried out in popular assemblies can and must give rise to the replacement of profit as the determining criteria of society.