Link to this page: https://www.socialistparty.org.uk/issue/393/4455
What we think
More bad news for economy
FOR BLAIR and Brown this was the 'just-in-time' election. "If the election had been delayed a few months, the party might have found it difficult to advance such a convincing case. The short-term economic outlook is darkening" wrote the Economist on 7 May.
It has been bad news on every front over the last few weeks. Industrial output has fallen to its lowest level for nearly 10 year - a figure which some analysts described as "truly shocking". "The question is fast becoming not whether the recovery has stalled but rather how bad is the downturn. This number is consistent with a renewed recession" said a spokesperson from HSBC.
Over one million manufacturing jobs have been destroyed since Labour were first elected in 1997. The knock-on effect of thousands of job losses at MG Rover is already being felt with body-panel maker Stadco closing in Coventry. Telecoms supplier Marconi tried to 'bury' the bad news of 800 job losses in Coventry and Liverpool by announcing them on the morning after the general election.
In the past New Labour have shrugged off job losses in manufacturing by saying that workers could get jobs in the 'booming' service sector. In some cases that has been possible, but often only by workers suffering a massive cut in wages and living standards.
Now even these low-paid jobs are under threat. Abbey National and other banks have just announced that over 3,000 jobs are to go. Retail sales are at their weakest for 13 years
Consumer spending has been propping up the economy, accounting for 80% of growth since 1997. But now all the signs point to a slowdown in spending. Higher interest rates mean it's much more difficult to pay back consumer debt which is running at an incredible £1 trillion. The housing market is slowing down which makes people feel poorer and increases in national insurance and council tax have also hit home.
And at the very time that economic growth is slowing New Labour are planning to sack tens of thousands of public sector workers which will cut back the market for goods and services even more.
WITH THE world economy also slowing down the British capitalists will not be able to export themselves out of a recession. The IMF has warned that global "economic imbalances" are getting worse. Economists are particularly worried about the enormous US current-account and budget deficits. These underlying problems mean that any number of factors could trigger a recession or even a slump.
Over the past few years the capitalists internationally have massively boosted their profits through what the Institute of Employment Rights called "flexploitation" - the driving down of workers' wages and conditions. Now, with economic storm clouds gathering, they will look to maintain those profits at the further expense of the working class.
That is what lies behind New Labour's third term agenda of attacks on pensions, public sector jobs and services and what remains of the welfare state.
The trade unions are workers' first line of defence against these attacks. At MG Rover the union leaders failed abjectly to defend workers' jobs, throwing up their hands and saying that there was nothing they could do to stop the closure. This lack of lead can affect the mood of workers and their willingness to fight back against job losses and attacks on working conditions. But others will draw the conclusion that they have to make a stand.
The vote by over one million public sector workers in favour of striking to defend pensions just before the election shows that the union leaders can be pushed, in some cases kicking and screaming, into taking action.
Continuing to develop that kind of resistance in the workplaces and the unions will be crucial to withstanding the onslaught capitalism's economic crisis will wage upon the working class and to the building of a political alternative to the free-market system.
In The Socialist 19 May 2005: