Ruling elite celebrate UK economy ‘rebound’ at workers’ expense
The UK economy grew by 7.5% in 2021, after suffering a weaker than expected hit in December when the Conservative government was forced to implement some restrictions in the face of the rise of the Omicron variant.
It was a cause for celebration for the political and financial elites and their bought and paid media commentators, all noting that it was the biggest expansion since 1941 and that it was making Britain the economy to the fastest growing of any wealthy country in 2021. Pubs and bars in the City of London were full of bankers drinking vintage champagne after receiving £4billion in bonuses, their biggest win since before the crisis world financial year of 2008.
The International Monetary Fund (IMF) expects Britain’s economy to grow by 4.7% in 2022, slightly less than its October forecast thanks to Omicron, but still more than the world’s other biggest capitalist economies. G7 world.
Chancellor Rishi Sunak, a multi-millionaire, congratulated himself saying, “Thanks to our support package and the right calls at the right time, the economy has been remarkably resilient.” The ‘support’ he refers to includes the Bank of England’s £900billion of quantitative easing and interest rate cuts, as well as low-interest government loans, the waiver debt repayment and other subsidies to businesses, banks and the stock market. He did not explain that the cost of all this must be recovered from working people in the form of tax increases, cuts to public services and runaway inflation that is decimating living standards.
The rebound comes after Britain suffered a much stronger economic contraction than its peers. Its largely consumer services-based economy collapsed 9.4% in 2020 when shutdowns were imposed in March and December, roughly double the plunge that followed the 2008-09 global financial crisis. This means that the output reflected in GDP is still lower than in the last quarter of 2019, while the United States and France have returned to their pre-pandemic levels.
Nonetheless, it confirms why Prime Minister Johnson was so adamant in October 2020 that there must be “No More Fucking Lockdowns” even if it meant the bodies would “pile up in the thousands!” The “herd immunity” strategy favored by the government from the start of the pandemic had nothing to do with science and everything to do with letting nothing interfere with the flow of profits to corporations and super -rich.
It was only on March 23, 2020, in the face of mounting public anger and scientists insisting that the current policy would result in hundreds of thousands of deaths, that the government reluctantly implemented a partial lockdown. to limit the spread of COVID-19 behind which he was carrying through his real imperative – funneling hundreds of billions of public funds to big business, including a furlough scheme for workers unable to work during the pandemic.
Weeks after the reckless reopening of the economy, including overseas travel, in July 2020 to restore business profits, and the announcement of an £840m ‘eat out to help’ scheme sterling as a subsidy for the hospitality industry, the pandemic was on the rise again. A few, even less stringent measures were imposed in September and reluctantly increased in the following months, culminating in the closure of schools between January and May 2021 as part of an unavoidable set of restrictions.
But in the summer of 2021, all restrictions were lifted, including on overseas travel at the insistence of airlines and the hospitality industry, even as infections remained widespread. The furlough scheme and other worker supports were scrapped in October.
In December, even as the country grappled with the spread of the highly contagious variant of Omicron, the government imposed only the most minimal social distancing measures and called on people to work from home wherever possible. possible. This too has since been lifted.
Now the Conservative Government, Labor Party, Unions and the media are proclaiming with one voice that the pandemic is “over”, Omicron equals the flu or the common cold and one must “live with” a supposedly endemic virus. It is this removal of all restrictions that could hamper profits and the ever more brutal exploitation of the working class that explains the rebound of the British economy, paid for by the loss of 180,000 lives and 1.3 million people suffering from Long COVID. This is celebrated by the political and financial establishment and the media.
But while output, especially manufacturing and construction, if not services, has increased and profits have risen – annual profits for the big banks alone are expected to top £34billion, the highest since 2007 during the boom before the financial crisis – workers’ living standards were and are falling. This follows decades of wage moderation, thanks to unions doing everything in their power to isolate and sell out workers’ struggles, which has caused labor’s share of GDP to fall by around 58-61. % in the 1960s and 1970s to about 53%. in the 1980s, where he remained.
Whatever meager wage increases workers may have had, their pay is falling further and further below rising inflation, now at the highest level in 30 years, amid a huge rise in the cost of energy, gasoline, consumer goods and food – goods which make up the bulk of the budget of the poorest households. Domestic energy prices set to rise 54% in April as energy regulator greenlights tariff increases for gas and electricity companies, while National Insurance contributions rise also. Rising inflation also means the Bank of England will likely raise interest rates again, triggering a surge in mortgages that struggling households will struggle to pay.
The Bank of England expects inflation to rise from its current rate of 5.4% to 7.25% in April. With taxes also set to rise, he warns households will see the biggest drop in disposable income since 1949, when records began. Retirees and the 6 million people receiving Universal Credit social benefits, 40% of whom are low-wage workers, will see their benefits increase by just 3.1%, less than half the projected increase in the cost of the life.
That hasn’t stopped Bank Governor Andrew Bailey, who earned £575,538 last year, from demanding that workers refrain from asking for a pay rise to help control inflation, a declaration of the brutal class war to be waged against the working class. Wages must be withheld to ensure that corporate profits continue to rise, CEOs receive their big bonuses, shareholders their unearned dividends, and huge government loans can be partially repaid.
In addition, the number of people in work is still half a million below pre-pandemic levels, largely due to a sharp drop in the number of self-employed – down 850,000 from two years ago – and older workers, as well as an increase in the number of long-term sick people, all in large measure the fallout from the pandemic and government policies that prioritized profits above all else.
What constitutes a “successful” capitalist economy worth celebrating is fundamentally hostile to the needs of the workers who produce all of society’s wealth. This poses the urgent need for the international working class to mobilize against the whole social order, based on a socialist program of class struggle for the expropriation of the oligarchy and the establishment of an economic system that serves social needs, not private profit.