This article is from the Socialist Labour Party (SLP)
According to Chancellor Alistair Darling’s pre-budget report a total of £20 billion is being allocated to stimulate the economy. Darling predicted that this stimulus would put the UK into a favourable position when there was a “return to growth in the world economy” which, according to the Chancellor, would be by 2010 with growth of “between 1.5 percent and 2 percent.”
However, when this £20 billion sum and the Chancellor’s comments are analysed and connected to developments in the real world it exposes either utter naivety or downright deceit on Darling’s part.
At the same time as Darling was delivering his report, the United States government was ploughing $250 billion into Citigroup, representing the largest government bailout to date, and the Federal Reserve announced they were making a further £800 billion available to the banking industry. All this is on top of the $200 billion they allocated to Fannie Mae & Freddie Mac and the $150 billion given to insurance giants AIG, and, of course, the $700 billion bailout fund that was authorized by the US Congress in September.
These are truly staggering sums and to understand the depth of the current crisis it is important to note that Citigroup is by revenues the world’s largest bank with over 200 million customer accounts in over 100 countries.
Added to this is the fact that General Motors, the world’s largest car manufacturer, established a hundred years ago, has had to go cap in hand to the US government for a bailout and in the UK recently both Woolworths and MFI have gone into administration.
So together you have long established companies going to the wall and the largest bank in the world now existing on a government hand-out, and yet Darling is talking about ‘a return to growth in the world economy’ as if all this was a minor hiccup.
Moreover, the Chancellor is suggesting that the cost of the measures he has implemented will have to be paid back by 2011. The much publicised 5 percent increase in income tax for those earning £150,000 or more covers less that half a million people and will raise only £2 billion; so how and from whom is the rest of the cost going to be raised?
The clue to this came when Darling addressed the CBI prior to making his report. He told his audience that the government borrowing needed to fund his measures would be paid back by ‘efficiency savings’ and the ‘sale of government assets’.
‘Efficiency savings’ is a euphemism for job losses and wage cuts, and the ‘sale of government assets’ relates to state-owned industries being split up and sold off to the private sector. In other words it is the working class who will be asked to pay for the bail-out of the financial system.
The significant increase in Job Centre staff throughout the UK, underlines the fact that Darling knows full well that unemployment is going to rise to horrendous levels, and the unemployed are going to be made to jump through hoops and go after none existent jobs in order to receive a pittance in return. What a stark contrast to the way the financial fat cats have been treated, and what an example of the class relations in the UK.