Alex Sampson, Plymouth Socialist Party
The Bank of England announced that it will be increasing its base interest rate from 3.75% to 4%, the first rate rise in three years. The reason given for the increase is the growing cost of oil due to the US’s disastrous war with Iran and the shutting of the Strait of Hormuz, which normally would handle around 25% of the world’s crude oil. The shutting of the Strait had an immediate effect on oil prices, with prices peaking at over $120 a barrel, although it has dropped since.
The Bank of England believes this inflation can only be slowed by increasing the cost of borrowing – the interest rate – so that we have less to spend on, typically, luxury items in an effort to bring the cost of those items down, ultimately bringing inflation down. This may have worked in the past when higher wages meant that ordinary families did have extra money to spend on luxuries, but the concept is laughable for so many in Britain today.
The constant eating away of the standard of living for most families in Britain since the banking crisis of 2007-08 and the 18 years of austerity that followed has meant that for a large part of the population. Luxury spending is a thing of distant memory. It is not us splashing our cash that is causing inflation, it is the billionaire owners of corporations, such as the power and water industries and supermarket owners, who are hiking prices and have continued to rake in enormous profits on essential items while the rest of us ration those essentials.
Food budget cuts
These interest rates will just squeeze the working class further while doing nothing to impact inflation – how will cutting the food budget of the average family bring down the cost of oil?
But the members of the Bank of England are wealthy themselves. These decisions they take do not impact them. They are not struggling with bills, rent, or food costs, and have no understanding of how much their decisions will increase hardship for the rest of us. They are fully invested in managing and maintaining the capitalist system, which works so well for them, and so they will continue to inflict cruel policies on the rest of us. Which is why this system of wars for resources, of grasping for maximum profit for a tiny minority, must be replaced with a system that works for us all, that allows us all a dignified standard of living. We must fight for a socialist future.
