Even Tory Economists Are Lining Up Against Austerity

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.

But we don’t have to play this game. We can take over the banks and cancel the debt. This generation can break the cycle.

The Voice of Anti-Capitalism in Guildford – Spotlight On The Budget

There’s no need for the cuts – the money’s there

This week’s budget will see the mainstream parties and the media agree that there is no alternative to huge cuts in public spending. The only debate is about how fast this should happen. Yet there is plenty of money that could be used to ensure that there are no cuts to vital services. Mark Thomas writing in the Socialist Worker gives us some suggestions:

Close the tax gap

The gap between tax owed and tax paid in Britain could be as much as £120 billion a year, say the Tax Justice Network. This “tax gap” is made up of tax avoidance using legal loopholes, and illegal tax evasion. Even the Revenue & Customs department says that £40 billion of tax is avoided and evaded. In addition, £28 billion in tax owed is still unpaid. But the Tax Justice Network say this “dramatically underestimates” the real figures. It puts the total tax gap at a minimum of £70 billion a year, but say it may be as much as £120 billion. The projected annual tax deficit between the government’s income and spending is likely to be around £170 billion. The Tax Justice Network point out that tax avoidance “shifts the burden of tax payment from capital (and the large companies that utilise it) onto labour, and from the wealthy and self-employed onto employed labour.” The rich should pay much more in tax. But even if they just paid what they currently owe there would be plenty of money for public services.

Cut military spending

Britain’s military budget for this year is approximately £37 billion. Under Labour, military spending has increased 11 percent above inflation since 1997. And the extra costs incurred from the wars in Afghanistan and Iraq aren’t covered by the Ministry of Defence’s budget. The Treasury Reserve pays them. Since 2001, an additional £9.5 billion has been spent on the occupations of these two countries.

Take from the rich

The recession seems to be over for some. Pay outs to shareholders in top companies are set to rise by 18 percent. Top bankers are still raking it in after the government stepped in the bail out the financial industry. Bob Diamond, Barclays bank’s president, boasted a couple of months ago that he wouldn’t accept a bonus this year in response to public anger. Yet Diamond still grabbed more than £22 million in pay last year. Other Barclays employees will share a bonuses of £2.2 billion. Investment bankers at its Barclays Capital division will get an average payment of £95,000.