Join the Socialist Party Join us today!

Printable version Printable version

Facebook   Twitter

Link to this page:

From The Socialist newspaper, 19 March 2008


Darling's 'more of the same' budget

"The most wrenching since the end of the second world war" is how Alan Greenspan, ex-head of the US Federal Reserve, described the current crisis engulfing the US economy. Other commentators are suggesting it will be the worst crisis since the Great Depression of the 1930s.

The collapse of Bear Stearns, the fifth biggest US investment bank, demonstrated once again to the world's markets that serious crisis is unavoidable despite all the attempts of the US central bank, the Federal Reserve, to prevent it by pumping liquidity into the markets on a vast scale. Further cuts in US interest rates are very likely, but they will not reverse the housing slump or quickly overcome the colossal debt burden of the financial sector.

The Bear Stearns crisis has echoes of Northern Rock, but on an even bigger scale. It is true that a private buyer was found to 'rescue' Bear Stearns. But JP Morgan was only prepared to buy it at a bargain basement price and on the basis of the US government underwriting it to the tune of $30 billion. Similar to Gordon Brown's failed attempts to get Virgin to buy Northern Rock, the risk has been nationalised, while future profits are privatised.

The US subprime crisis began eighteen months ago. It still has much further to go but already around a million people have lost their homes. Wages are falling and unemployment is rising. The US economy accounts for 25% of world GDP and its consumer market is six times as big as those of India and China combined. When the US sneezes the rest of the world inevitably catches a cold. If the US gets a bad dose of flu, however, the rest of the world may well get pneumonia.

However, listening to Alistair Darling's UK budget, you would think that the sound of the biggest economy in the world, the US, entering recession had barely reached the ears of the British government. Darling did downgrade the forecast for economic growth in 2008 by half a percent to 1.75 from 2.25%, but then predicted growth would bounce back in 2009. Most economic commentators have warned, rightly, that this is grossly over-optimistic.

It is true that, unlike in the US, the British economic crisis has not yet reached the point of impact and it is not possible to predict exactly when it will. Nonetheless, it is coming and the first effects are already being felt. Britain's biggest bank, HSBC, has announced a loss on its US housing investments of almost 9 billion. A glimpse of the scale of the credit crunch, and how much worse it could potentially get, was shown on Tuesday 18 March when the Bank of England offered the banking sector an extra 5 billion in emergency credit; the banks tried to claim more than 23 billion.

Even now, the coming economic storm is beginning to impact on the lives of working and middle class people in Britain. House prices outside London are falling. In some cities they have already dropped by between 5 and 10%. Even before the latest turmoil on the stock markets, mortgage lenders were withdrawing more than half the mortgages they had previously offered. Effectively, it is no longer possible to get a mortgage unless the bank has cast-iron guarantees that you will be able to pay it back.

Some estimates suggest that 50,000 jobs will be lost in the City of London this year. This in turn will result in job losses amongst the many workers who service the city. The finance sector plays such a dominant role in the British economy (it was responsible for 30% of overall growth in Britain between 2003 and 2006) that the growing crisis there is bound to affect the rest of the economy.

Tory lead

Against this background, Alistair Darling's 'more of the same' budget has gone down extremely badly. The latest opinion polls show the Tory lead over Labour growing, one giving them a 13 point lead - the highest in over twenty years.

Six weeks ago polls showed that New Labour still had a seven point lead over the Tories on the issue of the economy. Post-budget the Tories have an eight point lead on this issue. This could be temporary - the opinion polls are very volatile - a reflection of the extremely slight difference between the three establishment, pro-big business parties. Nonetheless, it is a very worrying sign for New Labour that it is no longer seen as trustworthy on the economy, even before the crisis really bites.

However, they should not be surprised. Darling's budget continued New Labour's consistent record of attacking the working class and helping the super-rich. There is enormous anger in British society at the growing gulf between the majority and the tiny elite of billionaires. Even looming economic crisis has not brought the orgy of money-making by the 'masters of the universe' to an end.

End of year bonuses for 2007 in the City of London exceeded all previous records. Responding to this pressure, the government had proposed a 30,000 tax on the 'non-doms'. But in the end, even this paltry measure, which LibDem leader Nick Clegg rightly described as "no more than a flea bite", was watered down.

Nor was the extremely minimal proposal to introduce a windfall tax on the energy companies carried through, despite British Gas announcing a 500% increase in its profits last year, at the same time as imposing double digit price increases on customers. The 50 increase in the winter fuel allowance for pensioners will not come close to covering the increased cost of heating their homes.

While there were continuing kisses for the billionaires, there were only kicks for the rest of us. The government made it clear it is intending to push ahead with trying to force 2.6 million people off incapacity benefit, along with its plans to force lone parents into work. In addition, public sector pay restraint and 'modernisation' (ie privatisation) of the public sector remain the order of the day.

Up until now, the anger that exists against New Labour's attacks on working class people has been partially muted because of the availability of cheap credit, and continued economic growth. In the coming period, this will no longer be the case. There is an overwhelming need for a determined trade union struggle against the attacks raining down on working-class people; combined with the development of a mass socialist political alternative that acts in the interests of working class people; rather than that of the billionaires.

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

In The Socialist 19 March 2008:

Global economic crisis

Darling's 'more of the same' budget

Anti-war demonstration

Interest in socialist ideas on anti-war demo

National Union of Teachers Conference

Strike back against pay robbery!

Magic strike at Merlin school

School tries to evict pupils

Socialist Party youth and students

Fight for decent youth facilities

Socialist Students

Socialist Party workplace news

Anger and strength in the DWP workplaces

End the blacklist!

Support for Shelter staff

Pay more to get less

One law for them, another law for us

In brief

Socialist Party news and analysis

It's not that councillors can't's that they won't!

Sack the mayor - not the wardens!

Remote MPs' privileged lifestyle

Salford campaign reprieves women's centre

Post Office closures

No more post office closures!

Following the Essex road

Socialist Party congress 2008

Socialist Party 2008 congress

Building a campaigning, fighting socialist party

International socialist news and analysis

Portugal: Strikes and mass protests against government


Home   |   The Socialist 19 March 2008   |   Join the Socialist Party

Subscribe   |   Donate  

Related links:

British economy:

triangleAmber warning lights flash on British economy

triangleTories torn - bin them now

triangleRight wing attempts to use single market against Corbyn

triangleHeathrow expansion exposes Tory divisions


triangleTrump's incendiary Jerusalem statement reignites Israeli-Palestinian conflict

triangleA world in crisis, ripe for revolution

triangleThem & Us

triangleRetail sector crunch: nationalise to save jobs


trianglePowerful picture of the Port Talbot steel workers' struggle

triangleYoung people being strangled by debts

triangleNationalise to save jobs at BAE Systems


triangleThe Socialist's 2017 quiz

triangleTotnes MP uses coffin controversy to distract from brutal NHS cuts

Bear Stearns:

triangleGlobal finance crisis deepens


triangleTamil Solidarity and Refugee Rights activists meeting

Northern Rock:

triangleTories flog bank assets to hellhound US profiteers

Alistair Darling:



triangleCapitalism gambles with our lives

Alan Greenspan:

triangleWhy public sector cuts are not inevitable

Gordon Brown:

triangleHow Blairism sank its claws into the Labour Party


triangleCampaign against political repression in Hong Kong

Interest rates:

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

Reports and campaigns

Reports and campaigns


Waltham Forest

Stop the rotten redevelopment plan, demand residents



Six months on - still no justice for Grenfell



Movement growing against fracking giant Ineos



Totnes MP uses coffin controversy to distract from brutal NHS cuts



Tory plan to hold dinner at coal mining museum defeated



Bradford campaign to save children's services launched


South London

South London health bosses' cover-up



Unite day of action against blacklisting



Brighton victory



Newham anti-academies strikes


Tamil Solidarity

Tamil Solidarity and Refugee Rights activists meeting



Support the Crossrail Woolwich walkout



Unite protest against blacklisting



Anti-DOO lobby of Liverpool's transport committee


Donald Trump

Mobilise to stop bigoted billionaire Donald Trump's state visit to Britain

triangleMore Reports and campaigns articles...

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

triangle14 Dec Stop the rotten redevelopment plan, demand residents

triangle13 Dec Six months on - still no justice for Grenfell

triangle13 Dec Movement growing against fracking giant Ineos

triangle13 Dec Totnes MP uses coffin controversy to distract from brutal NHS cuts

triangle13 Dec Trump's incendiary Jerusalem statement reignites Israeli-Palestinian...

triangle13 Dec Labour 'purge' furore really just democracy

EU parliament, Strasbourg

triangle13 Dec Brexit deal no solution to Tory rifts

More ...

triangle18 Dec Leeds Socialist Party: Religion and Socialism

triangle19 Dec Bristol North Socialist Party: Christmas social

triangle21 Dec Wakefield Socialist Party: Socialists and the National Question

triangle6 Jan Socialist Party national women's meeting

More ...

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



December 2017

November 2017

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