The UK economy shrank by 0.5% in the last quarter of 2010, proving that government claims of Britain’s recovery are lies.
Today’s updated GDP figures prove that the government’s austerity program is not working. Even the Labour Party, who let us not forget had its own cuts program, has issued a statement today arguing that cuts are being made too deeply, and too rapidly.
Economists were reported in the Guardian as saying that GDP for the last quarter was much worse than expected, which meant that Britain could now suffer a double-dip recession. With inflation hitting 3.7% last month, there are also growing fears the UK is heading for an unpleasant dose of “stagflation”. A term coined in the ‘70s for the twin economic problems of stagnation and inflation.
The news has sent the pound falling by nearly one and a half cents against the dollar to $1.575, and pushed the FTSE 100 index down. Not that we at the Voice Of Anti-Capitalism have any shares.
The ONS (Office of National Statistics) reported that the services sector – the dominant part of the UK economy – shrank by 0.5% in the last quarter, and construction declined by 3.3%. UK retail sales dropped 0.8% last month- and over the year have been flat. The retail sector suffered its worst December in 12 years.
Even the head of the CBI (Confederation of British Industry), Richard Lambert accused Vince Cable of hindering business and job creation through politically motivated austerity initiatives.
George Soros, hedge fund owner and criminal financial speculator, hailed as an expert by his Tory lackeys, speaking at the World Economic Forum yesterday said the government’s spending cuts were unsustainable. He warned David Cameron that the government would push the British economy back into recession unless it modified its austerity package. Nouriel Roubini, another Tory economist I’ve never heard of, was quoted as having similar warnings.
What this goes to show is that there are significant concerns in the government and among its business partners as to whether Tory austerity measures will provide the greater profits promised by the government. No matter what the Tory’s say in the press, the ruling classes have no solutions to the crises.
There are no solutions to the crises under capitalism. The system has been prolonged by massively increasing debt and fraudulently underestimating the risk associated with that debt.
Debt ridden institutions have been buying and selling other institution’s debt in a merry-go-round, and now the bubble has burst. The best our politicians can come with is to take the money out of our pockets and put it in to the banks. The result is no consumer spending and a resulting recession.