Failing forecasts
WORKERS, JUNE 2009 ISSUE
Since 1997, unemployment has never been less than 1,398,000. It is now 2,220,000, according to official figures. In the past 18 months, redundancies have risen more every quarter – 109,000 in December–February 2008, 120,000 in March–May, 147,000 in June–August, 225,000 in September–November, and 286,000 in January–March 2009. A record 857,000 are officially not in work, education or training. Yet the government says the recession has “done little long-term damage to the economy”.
Manufacturing output has fallen by 5.5 per cent in the last three months, the worst fall since 1948. The economy shrank 1.5 per cent in the three months to the end of April. The government predicts 1.25 per cent growth next year (the IMF predicts minus 0.4 per cent). The government predicts 3.5 per cent growth in 2011 and 3 per cent plus in 2012.
How good are these forecasts? Earlier, the economy was predicted to begin to recover this summer, and the Chancellor, Alastair Darling, forecast in November that the budget deficit for the year would be £38 billion. Now it’s saying the deficit will be a record £175 billion.
The recent budget paves the way for public spending cuts and tax rises worse than Thatcher’s. It is proposing 17 per cent annual cuts in investment spending from 2011-12. Debt interest payments will grow by 8 per cent a year, forcing public spending down by 2.3 per cent a year in real terms. By 2017-18, every family will be £2,840 worse off due to these tax rises and spending cuts.
The headlined “squeeze on the rich” will bring in £7 billion at most, when the government wants to borrow £700 billion from the banks over the next five years. The national debt will double; interest payments – £43 billion a year – will cost more than education does. The government is bailing out the banks, so that the banks can then bail out the government. It is borrowing not to invest but to strengthen capital at the expense of the working class – earnings are 6 per cent down on last year.
Child poverty is no less than in 1994-5, nor is pensioner poverty. Families with disabled children are twice as likely as others to be living in poverty. 800,000 more working-age adults are living in poverty now than in 1998. Incomes are more unequal.