More bad news for economy

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.