Beware a recovery!

What recovey? Pawnbrokers and loan sharks proliferate , photo Photomontage The Socialist (Click to enlarge)

The media is lauding an economic recovery. Whether there is one and whether it has substance is discussed in the articles below.

But the Socialist has a warning: Beware a recovery! It's a weak recovery, and one that could make life even worse for millions of people. Whatever the economic developments, years of austerity face the British population.

How can this be?

It's because of successive governments' plans to turn Britain into a low-wage economy. The culling of real wages has been so successful and lucrative for bosses, and disastrous for working people, that half of our households have to be subsidised - wages simply don't cover living, so the taxpayer covers what companies won't.

In other words more people can't make ends meet. In 2006, 35% of people struggled to keep up with bills and debt. That has reached 52% now. Their life is on a knife-edge.

And here's the rub. Most people get by on managing debt. That debt is only sustainable for many because of cheap interest rates.

But the trouble with a 'recovering economy' is governments and finance markets will increase interest rates.

In the words of one commentator: "It's hard to see how a return to normal times [higher interest rates] can end in anything other than a disaster for a significant swathe of the population."

So a poor economy means more misery. And a recovering economy means.... More misery! As Robin Clapp comments in the article below, system change is needed.

When are 70% of people right?

When they believe the recent economic improvements have not benefitted middle and lower income families.

The TUC point out that while between 2003 and 2008 gross domestic product rose 11%, the 'median' workers' wage stagnated.

A conservative estimate of falling real wages is of 6% in the last 3 years as prices rocket ahead of wages. Estimates vary from a loss of £1,350 to £2,000 per annum in real terms for most of us.

Morrisons say one third of customers are one pay cheque from bankruptcy
L&G say 37% of the population have no savings at all
The average family has only enough money to 'last' 34 days

Is there a recovery?

To listen to the news recently you'd be forgiven for thinking that Britain was in a boom. "Britain has wow factor" screamed London's Evening Standard.

Manufacturing 'soared' 1.9% month-on-month in June. Car sales were the best since 2007 and house prices were rising again.

Let's leave aside that even more young people will be excluded from owning a home as a result.

It's a weak recovery, and as the International Monetary Fund recently revealed, austerity has not rescued Britain, whose recovery is slower than most rivals in 'the global race'.

In fact those who control the free market economy and who brought us the 2008 crash are, like an addict relapsing to their drug, trying to build a recovery on debt-laden consumer spending and a housing bubble.

Robin Clapp from Bristol wrote to us to point out:

Tucked away in the Economist (27 July) is a telling paragraph that might have been lifted from the pages of the Socialist, revealing the growing pessimism of the more far-sighted and sober capitalists when weighing up prospects for the much-lauded economic recovery.

"But the recovery remains skin-deep. The bones of Britain's economy are rotten. Shoppers are consuming not because they earn more but because they can borrow more.

"Established firms with cash in hand are hoarding rather than investing. New firms with ideas but no funding find it hard to borrow: the banks will lend only against property.

"Britain still buys more abroad than it sells, despite a weak currency. At some point, these deeper problems will surface."

We agree there is no golden age ahead for British capitalism and while the Economist will quickly revert to its more usual windy optimism, it's worth bearing these words in mind as a rare antidote to the current nonsense being spouted about recovery.

Behind Osborne's frothy claims that 'Britain's back again' is a cancerous combination of new speculative bubbles, the reappearance of potentially toxic sub-prime mortgages, more privatisation, savage cuts to the social wage and the driving down of wages through a rocket-propelled rise in zero-hour contracts.

The only long-term cure for this patient is a transplant - from the existing social system to a socialist one.

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Finance appeal

The coronavirus crisis has laid bare the class character of society in numerous ways. It is making clear to many that it is the working class that keeps society running, not the CEOs of major corporations.

The results of austerity have been graphically demonstrated as public services strain to cope with the crisis.

The government has now ripped up its 'austerity' mantra and turned to policies that not long ago were denounced as socialist. But after the corona crisis, it will try to make the working class pay for it, by trying to claw back what has been given.

The Socialist Party's material is more vital than ever, so we can continue to report from workers who are fighting for better health and safety measures, against layoffs, for adequate staffing levels, etc.
When the health crisis subsides, we must be ready for the stormy events ahead and the need to arm workers' movements with a socialist programme - one which puts the health and needs of humanity before the profits of a few.