UK economy sliding into recession

THERE HAS been a raft of economic data in recent weeks showing the continuing decline in the UK and world economy but Alistair Darling says there is nothing to worry about!

Jane James

At a press conference last week he reassured us that: "The economy will continue to grow" and that the worst of credit crisis is over. Tell that to ordinary people struggling to make ends meet!

In contrast, an economist at Capital Economics declared that: "The economy has already ground completely to a halt" and there is "an increasing chance that the UK falls into outright recession."

Cost of living - from a Campaign for a New Workers' Party leaflet

It is almost a year since the collapse of the sub-prime housing market in the US which triggered the financial and economic crisis now impacting on the UK.

Retail is in decline, with large stores such as John Lewis reporting sales down 8.3% and Marks and Spencer's sales and profits falling fast. Big business is wringing its hands because people are spending less while urging wage restraint, supposedly to keep inflation down!

We are seeing Karl Marx's analysis of capitalism being borne out. He argued that under capitalism, ultimately, the working class cannot afford to buy back the goods it produces, leading to periodic crises.

UK households are 15% worse off than they were five years ago according to auditors Ernst & Young. The AA reports that the rising cost of fuel has led to low-income groups using their cars less with the prospect of not being able to afford a car at all.

Housing crisis

The housing sector is in trouble as sales of homes have fallen by over 50% and buying a home becomes more difficult as mortgages are harder to get. 3,200 building jobs have been axed in just seven days with Barratt and Taylor Wimpey laying off almost 2,000 workers between them.

Yet Shelter workers are predicting council house waiting lists rising to two million by 2010. What an indictment of capitalism that while millions of people suffer homelessness or overcrowding, building workers are being laid off!

Clearly, housing is far too important to be left in the hands of private companies and the vagaries of the economy. The Socialist Party's call for nationalisation of the building industry under democratic workers' control and management will become increasingly popular.

While most people are struggling to pay ever-rising fuel bills, higher food and housing costs, a rich minority are feeling no pain at all.

As shares fell worldwide last week, reflecting increased worries about the economy, Warren Buffett (the world's richest man) boasted that he has £35 billion spare to take advantage of the ailing stock market by buying up companies while they are cheap.

Banking conglomerate Goldman Sachs has raked in $600 million by making money out of raising capital for financial institutions suffering credit losses.

The chair of the Treasury Select Committee, John McFall, believes there is $260 billion of speculative money in the oil futures market which is contributing to record oil prices.

These obscene sums give a glimpse of how a socialist society could give everyone a decent standard of living if the wealth created by working people was used to meet the needs of all instead of providing the super-profits of a few.

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In The Socialist 8 July 2008:

Striking back against low pay