Link to this page: https://www.socialistparty.org.uk/issue/373/6103
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.
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.
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.
In The Socialist 4 December 2004:
International socialist news and analysis
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