Pre-budget statement: Workers will pay for economic failure
CHANCELLOR GORDON Brown’s pre-budget statement will probably be the last
before the expected general election in May. This could come just in time for
the New Labour government as they will have to face some unpalatable economic
and financial truths if they are to retain the confidence of big business and
the capitalist markets.
Kevin Parslow
More and more capitalists and their hired commentators are screeching about
the rising deficit in the government’s finances. They demand measures that
will regain their trust: either tax rises (but not on big business or the
rich) or cuts in public expenditure, and preferably both.
They talk as if this New Labour government had not been compliant in
carrying out the wishes of the capitalists! Blair, Brown and the rest of the
government have done the bosses’ bidding. There has been hardly any
legislation in favour of workers or trade unions in eight years of New Labour
government.
We still have the Tories’ trade union laws, a measly minimum wage, no
legislation likely on corporate killing despite in being in Labour’s 1997
election manifesto and over 100,000 civil servants facing redundancy!
But for the bosses, there is cause for concern. In March, the Treasury
forecast the budget deficit (the shortfall in government income after public
expenditure) to halve this financial year from last. In fact it continues to
rise, and could overshoot the forecast by as much as £12 billion. The
chancellor’s ‘golden rule’, where only government investment is covered over
the period of a full economic cycle by borrowing, is also likely to be broken,
with a so-called ‘black hole’ of £10 billion to find.
Economic downswing
PART OF the deficit in the finances is due to a slowdown in income of the
big companies, allowing them to pay even less Corporation Tax as a result,
despite the many tax loopholes found by advisers and accountants.
But offset against this is the bonanza for the oil companies with a barrel
of oil up around the $50 a barrel mark. The chancellor is hoping for a small
windfall from this sector in the second half of the financial year.
Of course, the chancellor could cook the books or fiddle the figures but
that won’t be anything more than a quick fix for the finances and the economy
as a whole until after the election.
The effect of the succession of rises in interest rates has been to reduce
the amount of money consumers have to spend and, on top of that, make them
psychologically wary of the future, adding a further downswing to the economy.
Exports to the US and dollar-linked economies are being choked off because
of the rise in sterling against the dollar, while the rise in the euro’s
strength is choking the economies in Europe, Britain’s main export area. In
fact, if it wasn’t for the investment in education and the NHS, growth in the
economy would be next to zero!
The chancellor is keeping the economy from bumping along the bottom of the
seabed.
In reality, the chancellor is giving us very little, while the threats are
to take a lot away the day after the general election.
The Tories promise misery for millions to finance tax cuts for big
business; the Liberal Democrats would, if sharing power, propose austerity
measures too.
The working class and the trade unions as a whole must now prepare to fight
the attacks which will surely come from whatever government is elected.
This means not just industrial action but withdrawing all funding and
support from New Labour and instead financing a new workers party which can
truly represent workers’ interests.