Join the Socialist Party Join us today!

Printable version Printable version

Facebook   Twitter

Link to this page:

From The Socialist newspaper, 18 August 2010

Forecasts of fragile economic growth

The fragility of Britain's economic growth has been confirmed by various reports and comments from bankers and economists over the last week.

The Bank of England, on 11 August, slashed its growth forecast for this year and raised its estimate of inflation. Its governor, Mervyn King, desperately trying to be upbeat, spoke of a "choppy recovery" and several years of sluggish growth. He may yet turn to even more quantitative easing, to try to 'recover' the recovery.

The predictions of The Socialist are unfortunately being borne out; that we are entering a lengthy period of at best, little growth, high unemployment and workers' living standards being held down.

House prices are again falling, leading more house owners into negative equity. Basic food prices are shooting up, while pay levels are growing by much less than inflation, making it increasingly difficult for people to get by.

Alongside this, the impact of the government's cuts is only just beginning to be felt; there is a much worse impact to come. A third of bosses are expecting to cut jobs this autumn according to research by the Chartered Institute of Personnel and Development. This is across both the public and private sectors, with Local Authority bosses going the furthest - 63% of them are planning lay-offs.

The few glimmers of hope in recent reports on the economy come with gloomy caveats. There was an increase in the number of people in work in the quarter to the end of June but much of it was for part-time work only. The UK economy grew by 1.1% in the same quarter but much of that could be due to restocking of goods rather than indicating sustainable growth.

In fact the danger of a double dip recession continues to exist, with its possibility being increased by the savage cuts programme of the Tory/Liberal coalition government. The public spending cuts are starting to bite heavily into the private sector as well as the public sector, as many private companies depend on public sector contracts. This will hinder the prospects for economic growth, as will cutting people's spending power through job losses, reduced working hours, tax rises and low pay.

Will the economy be rescued by exports, which 'surged' in the second quarter, helped by the reduced value of the pound? This pick-up is likely to be short-lived, not least because the largest taker of those exports was the US, which is again descending into economic troubles.

The US Federal Reserve 'downgraded' its outlook for the economy last week, saying that household spending is "constrained by high unemployment, modest income growth, lower housing wealth and tight credit". This is after US president Obama's $787 billion stimulus package in the economy has been virtually used up and the Federal Reserve has put in $1.2 trillion worth of quantitative easing, a programme now being continued in an attempt to sustain liquidity. Lowering interest rates further is not an option, as they are already near zero.

Fears in the US

For the US capitalists, a number of fears remain; of renewed recession, of deflation, of a run from the dollar by America's foreign creditors - especially China - and of the spread of the US's current problems around the world.

The eurozone had a 1% rise in GDP in the second quarter, equivalent to a substantial 4% on an annualised basis. The German economy was responsible for over half of that growth - it grew 2.2%, its best quarterly rate since Germany's unification. However, the factors fuelling that growth seem unlikely to last, such as the relatively low level of the euro and a pick-up in markets for German goods internationally.

Also, a major crisis element for the eurozone is the big divergence between its countries. The economies of Italy, Spain and Portugal are barely growing at all and Greece is still in recession. The major cuts programmes in these countries will hinder or even prevent growth, as the cuts can do in Britain. Undoubtedly fears about sovereign debt defaults and the very survival of the eurozone are going to resurface.

So the millions of workers in Britain and beyond whose living standards are being crushed down by job losses and other cuts cannot look to a prospect of strong economic growth returning and creating millions of new jobs to come to their rescue.

Yet at the same time, the bankers are raking in huge profits again and many other large private sector companies are also reporting substantial gains. Much of this is driven by cost cutting rather than strong sales, but it indicates that the rich are still doing very well for themselves, while ordinary people suffer on all fronts.

Anger among working class people will only grow in this situation, with ever-increasing pressure directed at the trade union leaders to use the potential might of the trade union movement to challenge it.

Why not click here to join the Socialist Party, or click here to donate to the Socialist Party.

In The Socialist 18 August 2010:

Action now to defeat cuts!

International socialist news

Pakistan: Workers' solidarity urgently needed

Floods in Pakistan bring devastation - poor suffer most

Socialist Party youth and students

Youth must fight for a future!

Student demo should be start of the fightback

No to advice service cuts

Decent pay for interns

Uni bosses say cuts will cause closures

Socialist Party editorial

Forecasts of fragile economic growth

Socialist Party news and analysis

Cameron sticks the boot into our council housing

Private-profit company granted 'snoopers' charter'

Private Finance Initiative: A licence to print money

Socialist Party campaigns

Coventry Against the Cuts challenge councillors' 'legal obligation'

Northern Ireland: Belfast Stop the Cuts Alliance established

Bromley care workers fight privatisation and job cuts

Defend Our Community Services launched in Bracknell

Cuts devastate mental health services

Socialist Party Marxist analysis

The legacy of Leon Trotsky

Socialist Party workplace news

Kirklees Unison strike ballot launched

CWU members accept BT pay deal

Debate how to fight back at Socialism 2010

Tube staff vote for action against cuts

Jobs under threat at Ministry of Justice

Airport workers win improved offer from BAA

Workplace news in brief

Socialist Party events

Socialist Party summer camp - book now!

International socialist news and analysis

Russia's raging wildfires - a crisis of government policies

Socialist Party news and comment

Bradford must organise against the EDL

Birmingham: Community says 'No' to racist spy cameras


Home   |   The Socialist 18 August 2010   |   Join the Socialist Party

Subscribe   |   Donate  

Related links:


trianglePowerful picture of the Port Talbot steel workers' struggle

triangleYoung people being strangled by debts

triangleNationalise to save jobs at BAE Systems

triangleTories torn - bin them now

triangleThe end of the Tories?


triangleNorth London hospital workers fight cuts and job losses

triangleNo cuts - hands off King George A&E!

triangleTories scrap the NHS pay cap: now fight for real-terms pay rises!

triangleSchools "can't go any further" - stop the cuts: set deficit budgets now


triangleObesity epidemic: end food market anarchy

triangleSwansea Socialist Party: Mother Jones - A US labour pioneer

triangleJoin the Orgreave Halloween rally


triangleCan you donate to the Socialism 2017 appeal?


triangleEU-Canada trade deal battle points to Corbyn's Brexit opportunity

News and socialist analysis

News and socialist analysis



Hundreds of torture victims wrongly detained



Tories torn - bin them now


What we saw

What we saw



Obesity epidemic: end food market anarchy



Tories scrap the NHS pay cap: now fight for real-terms pay rises!



Young people being strangled by debts



The end of the Tories?



Nasty party out the Tories


Black history

The fight against racial discrimination is tied to fighting against capitalist austerity



Housing crisis: Corbyn's positive measures blanked by Labour's right


Universal Credit

Major attacks 'Universal Credit', half a million more face poverty


Them & Us

Them & Us



NHS meltdown - fight the Tory cuts



IMF helps cause inequality it slams



Tories wreck our NHS

triangleMore News and socialist analysis articles...

Join the Socialist Party
Subscribe to Socialist Party publications
Donate to the Socialist Party

triangle19 Oct Arriva North West bus drivers strike over pay

triangle18 Oct Russia, October 1917: When workers took power

triangle18 Oct Tories torn - bin them now

triangle18 Oct Royal Mail bosses block strike - back postal workers

triangle18 Oct Balloting members on the pay cap

triangle13 Oct The end of the Tories?

triangle11 Oct Nasty party out the Tories

More ...

triangle23 Oct Chesterfield Socialist Party: The continuing struggle for abortion rights

triangle24 Oct Liverpool Socialist Party: The October Russian Revolution 100 years ago to the day

triangle25 Oct Salford Socialist Party: The October 1917 Russian revolution

triangle25 Oct Swansea Socialist Party: Mother Jones - A US labour pioneer

More ...

Socialist Party Facebook page
Socialist Party on Twitter
Visit us on Youtube



October 2017

September 2017

August 2017

July 2017

June 2017

May 2017

April 2017

March 2017

February 2017

January 2017





















Platform setting: = No platform choice