Con-Dem cuts - 'only the beginning'
The Tory/Lib Dem government's first £6.2 billion of cuts, piles on top of £12 billion of the previous Labour government's cuts that are being implemented this year. Many local authorities, such as Nottingham and Leeds councils, have been viciously cutting, and now the £6.2 billion includes cuts in local authority grants that will further slash their starvation rations. Councils had already planned to cut around 100,000 jobs over the next three years, so this massacre will be made even worse.
A few of the proposed cuts will not necessarily be damaging, like reducing expensive and unwanted consultants, or stopping first class rail travel for civil servants. But even though this first £6 billion is small compared to what is coming, it still includes many extremely harmful cuts. The 20,000 extra university places promised by the last government - which were not enough - will be halved to 10,000.
There are cuts to the national rail network and probably for London transport, which will no doubt be passed on to passengers through higher ticket prices. The Welsh, Scottish and Northern Ireland administrations are to suffer cuts. 'Non frontline' civil service recruitment is to be frozen, when frontline staff have already been cut to the bone, and in any case they cannot do their jobs properly without the roles of the so-called back-office staff.
Child Trust Funds are being axed and the Future Jobs Fund is to be cut and then abolished. The Socialist criticised the FJF for only providing temporary jobs on the minimum wage or little more, but without it being replaced with a better scheme, this is a cut that will worsen the plight of young people who are desperately struggling to find work. Environmental programmes will also be hit, including the Low Carbon Buildings Programme and flood management.
With this round and those to come, the government is hoping that it can inflict a massive dose of cost-cutting pain in the shortest possible period of time early on in its period of office, and then appear more benign in the run-up to the next general election. By then it is assuming the economy will have recovered, with a return to steady growth rates.
But with growth presently being so low - only 0.3% in the last quarter - it could be years before there is anything resembling a real, sustained recovery. This indicates a danger for the government's slash and burn strategy; that it could trigger a spiral back down into recession if the public sector cuts are too fast and too deep.
Also, the eurozone crisis could develop further (see Eurozone Crisis Continues, below) and severely delay a sustained economic recovery across Europe as a whole, including in Britain. Half of Britain's trade is with the eurozone, so Britain is far from immune from the plight of the euro.
The other major problem for the government, even more intractable for it, is implementing its massive austerity programme without facing a major confrontation with the trade unions and the working class as a whole, as the Greek government and other governments are facing. However this simply will not be possible for it, as workers will have no choice other than to fight back against being dragged down to dickensian conditions.
To at least delay an organised reaction, the main political parties all tried during the general election to instil a belief in people that cuts are essential, and the media aided them by censoring alternative views. In the next few weeks and months The Socialist will carry articles that thoroughly expose this con trick for what it is. It is the well-being of the capitalist class that the destruction of our services is designed to protect and not that of working and middle class people.
It is austerity for the mass of people and not for the ruling elite, driven through by a cabinet that contains 18 millionaires. We call for the trade unions to urgently build mass protests and action, and we will argue the need for the labour movement to adopt a socialist programme that can build a path towards ending this monstrous, callous, class-based system that is incapable of offering a decent future for the present and future generations.
Eurozone crisis continues
Barely had the ink dried on the deal to bail out Greece with €750 billion, when German prime minister Angela Merkel realised that further turmoil was looming.
She suddenly announced a German ban on naked short selling by speculators, spreading alarm by saying that "the euro is in danger. If we don't deal with this danger then the consequences for us in Europe will be incalculable". Reflecting the tensions between the European ruling classes, the French economics minister rapidly disagreed, saying: "I absolutely do not think the euro is in danger".
Merkel's crackdown on speculation is mere window dressing as she can't reach anywhere near all the global speculators and in any case speculation isn't the root cause of the crisis. The crisis is fundamentally an organic crisis of capitalism, which means weak economies with high debts - at present especially in Greece, Spain, Ireland and Portugal.
She, and the other eurozone leaders, are floundering between a rock and a hard place in their attempts to dig the zone out of crisis, with no certain success on the horizon. Merkel's panic was based on a real danger that the other economies besides Greece's, could sink. Eurozone governments are petrified of the crisis escalating to the point of a rapid plunge in value of the euro and the disintegration of the currency union, with either one or more of the weaker countries falling out of it or one or more of the stronger economies choosing to get out. Much of the German press has been calling for Germany to pull out.
When the currency union was triumphantly set up 10 years ago, no provision was made for countries to leave it. But now, "orderly state insolvency" proposals are being hastily discussed that would give a route out for countries that are desperate to survive economically by devaluing their currency, or that would give those countries an enforced, 'supervised' means of economic 'restructuring'.
Part of this 'restructuring' would be huge cuts, like those that the weaker economies across Europe are already being pressured into inflicting.
The Spanish government is imposing a €15 billion austerity package, including a 5% cut in civil service salaries. Most public spending in France is being frozen. VAT is being increased in Greece and Portugal, the state pension age is being raised in Greece, and so the list goes on.
Workers are fighting back in these countries and others with massive protests and general strikes, and will welcome the call initiated by Socialist Party (CWI Ireland) MEP Joe Higgins for a European wide week of protest at the end of June.