Even a century back, it was believed that ‘‘the sun does not set in British rule’’. Because Great Britain (United Kingdom comprising England, Scotland, Wales and North Ireland) was one of the most powerful imperialist countries having thrived over hundreds of years based on its colossal and unparalleled industrial development following rise of capitalism in the 18th and 19th centuries and enormous wealth gathered by plundering its large number of colonies spread across the globe. The manufacturing monopoly of England was the pivot. But if anyone cares to look at the present economic condition of Britain, it will clearly bear the stamp of growing acute unsolvable economic crisis that global imperialism-capitalism is stricken with following an inexorable course of history. Way back in mid-1800, great Engels had dwelt upon the deteriorating condition of the working class of England despite the country’s much-boasted economic might. But now, the toiling people of Britain are in immense distress as reflected in the published news.
Spectacle of people’s distress
The annual rate of inflation reached 11.1% in October 2022, a 41-year high, before easing a bit in subsequent months to 10.1% in January 2023. High inflation affects the affordability of goods and services for households. Consumer prices, as measured by the Consumer Prices Index (CPI), were 10.4% higher in February 2023 than a year before. Another important driver of high inflation is household energy tariffs and road fuel costs. From January 2022 to January 2023, domestic gas prices increased by 129% and domestic electricity prices by 67%, food prices are going up by 18%. The cost of living increased sharply across the UK during 2021 and 2022. According to the Office for National Statistics, 94% of adults in Great Britain reported an increase in their cost of living in January-February 2023. Poorer households often spend relatively more than others on food, heating, and fuel. But now, in view of rising inflation, many British citizens are going without food to save money for rent, not cooking food to save energy costs and disconnecting gas connection to save money. The Bank of England has been raising interest rates to try and lower the inflation rate below its 2% target but that has not been fruitful. The living standards and wages in the UK have fallen significantly behind those of Western Europe. By some measures, in fact, real wages in the U.K. are lower than they were 15 years ago. The Office for Budget Responsibility (OBR) expects real post-tax household income to fall by 4.3% in 2022-23, the biggest fall since comparable records began in 1956. While spurt in inflation is a global feature of a decadent moribund capitalist system, created by its own laws of operation, the UK still has one of the highest inflation rates despite weak economic growth.
Because of the spike in prices and lowering of income, 14 million (1.4 crore) people, a fifth of the British population, now live in poverty. 4 million of these are more than 50% below the poverty line, and 1.5 million are destitute, unable to afford basic essentials. 46% of children from black and minority ethnic groups are in poverty in Britain, compared with 26% of children in white British families. Living without the security of decent housing with constant pressure created by low paid work or unemployment has significant consequences for emotional and psychological well-being, health, family relationships and the lives of children. Over 40 lakh children are not getting the minimum food needed for a bare living. Further, at least 3,20,000 people are currently homeless in the UK, according to estimates by Shelter, the homelessness charity as on September 2020. The figure rose 4% last year, meaning that 36 people lost their homes each day. The charity also found that 135,000 children in Britain are homeless, living in temporary accommodation, which is the highest number in 12 years. Last year (2021), the Government pledged to halve the number of rough sleepers on UK streets by 2022 through a £100m programme. The data also indicated that there are just 825 homes per 1,000 families—the lowest number since records began in 1991. The lack of available housing means that the number of families sharing a privately rented home in England has trebled since 1991. People are opting for solutions that include factory-built or modular homes.
People are so enraged that they have raised question that while over 60 lakh Britishers are unable to light up electric room heaters because of spiraling energy prices despite temperature having fallen below 2 degrees centigrade, what prompts wife of the British Prime Minister to enjoy holiday with her family in Goa by spending Rs 7 lakh crores per week.
Economic downturn
Next is that the GDP in the UK instead of growing fell to minus 0.2% in 2019, its worst performance since 2012. Again, it suffered the biggest fall in national income (GDP) since the early 18th century when the economy was slided in April 2020 following outbreak of covid 19 pandemic. Though the British government claims that it bounced back rapidly, the recovery was virtually negligible. With low growth, there is less capacity for real wage growth. In that case, revenue accretion would suffer entailing less public spending.
But the British government and its cohorts are not found to be that bothered on this question. Instead, they are shamelessly simplifying and reducing poverty down to individual choice pitting the heroic ‘working poor’ against the feckless ‘scroungers’ on benefits. They tend to ignore causes like price rise, wage inequality, dipping employment opportunities, racial discrimination and barriers to work. In the three months to December 2022, total pay in the United Kingdom grew by approximately 5.9 percent, while regular pay grew by 6.7 percent. When this was adjusted for inflation, however, total pay fell by 3.1 percent, and regular pay by 2.5 percent. Though British authorities claim that more than three-quarters of the population are gainfully employed, according to official figures, it has not been possible to manage enough transition of these jobs into higher productivity and hence higher pay. Hence the claim of ‘gainful engagement’ is a misnomer. Secondly, the unemployment rate of the United Kingdom was reported to be 3.7 percent in December 2022, one of the lowest unemployment rates since 1974. However, according to the Monetary Policy Report of Bank of England, November 2022, the ‘‘Unemployment is nevertheless expected to increase significantly over the remainder of the forecast period (2023-25) with the jobless rate rising to almost 6½%. This reflects the very weak outlook for demand growth’’.
Fact is decades of underinvestment have taken their toll on the UK. Small and Medium Enterprises (SMEs) make up 99.9% of the UK’s business population, accounting for three-fifths of employment and half of total private sector turnover. In other words, surplus capital is not channelized towards creating sustainable asset classes that could deliver both economic and social returns, and correct decades of underinvestment. Instead, it is being diverted to speculation and unproductive arms manufacturing.
Major infrastructure projects, from broadband to sewers, were put on hold, leading to massive issues nationwide. The North of England has been hit especially hard. The UK desperately needs more investment: in towns and cities, housing, infrastructure and clean, green, cheap energy. Government estimates suggest that almost £50000 billion (£50,000 billion or around Rs 50 lakh crores) is required to bridge the infrastructure funding gap. A recent analysis by the Institute of Chartered Accountants in England and Wales found that the UK continues to underinvest in infrastructure. Obvious question is why? Answer lies in the global capitalist crisis stemming from more and more shrinkage of the market due to rapidly falling purchasing power of oppressed people denied appropriate means to earn. In absence of a market, productive investment is not taking place as the monopolists would not deploy capital if there is no scope for maximization of profit. Since 2009, labour productivity has stagnated, falling considerably behind the previous UK’s trend of growth. Poor productivity is a major factor behind the very limited growth in real GDP and a flatlining of average real wages. Since the turn of the century, the labour share, a measure of wage bills has been relatively flat. The UK is not the only country to face a slowdown in productivity growth, but the record of the UK is one of the lowest in the G20.
European Union and Britain
As known to all, a huge political fight has erupted in the UK government over Brexit—Britain’s controversial decision to break away from the European Union in 2018 following a referendum in which Britons voted for a hazily defined Brexit by 52 percent to 48 percent. But why was Brexit? It needs to revisit the past for a clearer idea. Immediately, after the Second World War, the European countries, faced basically two-fold problems: one of freeing themselves from the economic and political domination of the upcoming US imperialists, which was least affected in the war and had by that time substantially consolidated its position, both economically and militarily and the other of regaining, at the same time, their own spheres of influence with a view to ensuring enough market to overcome the deepening crisis. So, first the EEC (European Economic Council) was formed by the war-ravaged European countries. But ‘resolving differences’ peacefully could never prevent internal contradictions within imperialist-capitalist countries of EEC from playing their inevitable role. From their class position and being basically united in their class interest against the working class and proletarian revolution, the US imperialism could compel and drag the European capitalists-imperialists to join NATO with a view to containing the Soviet Union and communism. Yet the European capitalists-imperialists strove to free themselves from US domination. Even in their so called ‘unipolar’ world, the contradiction between the US imperialists on one hand, and the European powers on the other was apparent in different global issues, like that of the naked aggression on Iraq by the US-UK imperialist combine being opposed by the French or German imperialists. In 1992, after the sad dismantling of Soviet socialism because of counter-revolution planted by the defeated Russian bourgeoisie in alliance with Khrushchevite revisionist leadership, ECC had given way to a broader and stronger alliance, the European Union or EU. The EU was formed as an economic union of a group of European countries as they desired and decided upon to move ahead with joint and common policies, common tariff and common currency. From here the EU tended to grow up, with more members and to that extent with greater strength, into a more and more centralized political entity. The aim was to unite to take on the US on the global business market and seek to restrict the US from easy entry into the home markets of EU countries. The organization, however, bore differences right from the start in approach in running it. The United Kingdom wished decision-making to be unanimous with member-states having the power. Others, like France, Germany and certain others tended to prefer decisions be made by majority votes with power to rest with independently appointed officials or by representatives elected by the legislatures or people of the member states. It is noteworthy to recall that as far back as in 1915, in the post-first world war situation, when world capitalism-imperialism was facing a mounting economic-political crisis and was groping for a way out, great Lenin wrote in Sotsial-Demokrat (Collected Works, Prog. Pubs., Moscow, Vol. 21, 1965, pp. 339-43) on the Slogan for a United States of Europe: ‘‘A United States of Europe under capitalism is tantamount to an agreement on the partition of colonies. Under capitalism, however, no other basis and no other principle of division are possible except force….Of course, temporary agreements are possible between capitalists and between states. In this sense a United States of Europe is possible as an agreement between the European capitalists… but to what end? Only for the purpose of jointly suppressing socialism in Europe, of jointly protecting colonial booty against Japan and America….A United States of the World (not of Europe alone) is the state form of the unification and freedom of nations which we associate with socialism—until the time when the complete victory of communism brings about the total disappearance of the state, including the democratic.’’ Lenin also stated clearly that ‘‘…a general alliance embracing all the imperialist powers, is inevitably nothing more than a “truce” in periods between wars. Peaceful alliances prepare the ground for wars, and in their turn grow out of wars; the one conditions the other, producing alternating forms of peaceful and non-peaceful struggle on one and the same basis of imperialist connections and relations within world economics and world politics.’’ (Imperialism, the Highest Stage of Capitalism). How prophetic his views have proved to be.
Sharpening contradiction between EU and Britain
Within no time, the 28-member strong European Union (EU) particularly the 19 countries having euro (€) as common currency (eurozone) are now shaking on a tottering base. A severe economic crisis which is endemic to the capitalist system has engulfed it. One after another member countries are baring their rickety skeletons. The economy of the UK had also slowed down dramatically as the crisis engulfing British industry intensified. Manufacturing was particularly hard hit with output down 1.8%. A sharp fall in production means the gap between the value of imports and exports—the so-called current account deficit—becomes yawning. It was reported to be around £12bn in January-February 2013, much worse than what was forecast. A large deficit means Britain was over-reliant on foreign money and exposed to shocks in the global capitalist economy mired in an acute insolvable market crisis. The financial crisis and the recession led to a sharp increase in government borrowing. The net public sector borrowing of Britain rose to £90bn (4.9% of GDP) in 2013. But still there was a deficit and total accumulated debt has risen to about £1.5 trillion.
Secondly, European powers formed the EU and then floated the euro as common currency. However, because of internal contradiction within the EU rulers, UK, Denmark and some other countries did not join eurozone, and retained their own currency like Britain that kept British pound (£).The protagonists of euro argued that as share of US in world trade was 17% as against 19% of the eurozone countries, launching euro would create a parallel strong economic zone challenging domination of dollar.
With the debt overhang of southern European countries like Italy, Greece and Ireland, and the bitter medicine forced on them by Germany and France in particular, there was a cry among the people of the EU, particularly eurozone countries, to come out of the so-called ‘one Europe’ combination. They felt it was the EU and euro that had caused the disaster. Earlier, the Greek people voiced this demand which came to be known as Grexit (Greek exit). Then the British people had raised the same slogan of Brexit (Britain exit from EU). There were feelings among the people of the UK that their jobs were being taken away by the people coming from East European countries, who were employed at lower cost of wages. That benefited only industrialists to increase profits at their cost.
‘‘Global Britain’’ was the buzz term that Brexit supporters, and indeed the UK government, had given to this reverie. The governing idea was that once the UK managed to finally cast off the EU’s yoke, it would be able to strike its own trade deals with countries around the world. When Britain left the European Union on 31 January 2020, the then British prime minister proclaimed that Britain would ‘‘rediscover the muscles that we have not used for decades’’.
Post-Brexit peril
It is said that the present economic crises were accentuated by the UK government decision of Brexit i.e., to leave the European Union, which cuts its economy from the EU. Ever since Brexit, immigration, exports, and foreign investment have all declined, likely reducing the size of the U.K.’s economy by several percentage points in the long run. In fact, three years after a rupture in its economic ties with Europe, the country appears anything but muscular. Britain’s trade has been hit significantly by its departure from the single market. Trade in goods with the EU fell sharply after the Brexit transition period ended, with UK imports from the EU dropping by approximately 25 per cent more than UK imports from the rest of the world, a trend which persisted throughout 2021.
The UK has not only left the EU, but also the Single Market and the Customs Union. This has caused considerable disruption to EU trade, which in 2016 accounted for over 50% of UK trade. Firms exporting to Europe had to face an increase in regulation, custom forms and charges for selling goods in the EU. The OBR claim the effects of Brexit will cut UK GDP by 4%—this is up to £100 bn in lost output and £40 bn less revenue to the Treasury (OBR). Another think tank Centre for European Reform (CER) models that the cost of Brexit has been a shortfall in GDP of 5.2%. Since the Brexit vote, the Pound has devalued 16%, causing an increase in the cost of imports and contributing to domestic inflation. Whilst a devaluation, in theory, makes exports more competitive, there is little sign of a prolonged boost in exports.
The UK current account deficit hit a record 8.3% of GDP in Q1 2022. Post-Brexit, the UK has become less desirable as a destination for capital flows. If these capital flows do slow down, it will put further downward pressure on Sterling. The OBR predicts a worse-case scenario of public sector debt of 320% of GDP within 50 years. Another impact of Brexit is the loss of migrant flows from the EU. This has led to considerable labour shortages in areas such as lorry drivers, fruit pickers, hospitality and transport. Labour shortages have contributed to queues at airports and fruit remaining unpicked. In the 2016 Brexit referendum, 52% voted in support. As of February 2023, 54 percent of people in Great Britain thought that it was wrong to leave the European Union, compared with 33 percent who thought it was the right decision. So, it is proved that Brexit was no panacea.
Why this crisis?
Brexit or no Brexit, this mounting economic crisis was inevitable. It is part of the third general intense market crisis of global imperialism-capitalism from which no one has any escape. Ruling governments of all countries are saying that global political tumult, Ukraine war, fluctuation in oil prices, etc., are coming in the way of their otherwise ‘‘planned robust inclusive economic growth’’. This is not true, because oil prices in December 2022 have fallen to pre-covid level (September 2018). If everyone points finger at externality, who then is the culprit? Whatever the ruling quarters say or try to argue and vend hollow optimism, not only Britain but all imperialist-capitalist countries would be enmeshed in greater and greater crisis the brunt of which is borne by the common people. Same is the case with Britain.
People’s struggles to be channelized along right direction
So, the working class and other sections of toiling masses are on the path of struggle. Strikes across Britain over the past few weeks involving hundreds of thousands of workers have repeatedly disrupted key services like healthcare and rail transport. Thousands of ambulance workers too were holding a second day of strikes on Thursday over pay and conditions, during which they will only respond to the most urgent cases. Their first strike took place in December and further action was planned for January. The Department of Health has also alerted Military Assistance for the Civil Authorities. Some analysts say that hundreds of military personnel will be appointed as ambulance drivers with five-day training amid the waves of strikes.
Unison, one of trade unions representing ambulance workers, has said that the government “had months to intervene and end this dispute but has failed to do so,” blaming the administration for repeatedly refusing to come to the table for negotiations to solve the crisis. Nearly 70,000 staff at 150 universities across the United Kingdom will strike for 18 days between February and March in connection with disputes over pay, working conditions and pensions, the University and College Union (UCU) said in January last. Nearly 70,000 staff at 150 universities across the United Kingdom will strike for 18 days between February and March in connection with disputes over pay, working conditions and pensions, the University and College Union (UCU) said in January last.
But as our Party, SUCI(C), founded, reared and steered by Comrade Shibdas Ghosh, an outstanding Marxist thinker and philosopher of the era and worthy continuer of great Marx-Engels-Lenin-Stalin-Mao Zedong, has been repeatedly pointing out, solution does not lie in quackeries or baseless prescripts of the ruling class. Nor does a change of government through election would bring any succour. Whether it is the Labour Party or Tory party in Britain, the BJP or the Congress in India, the capitalist state would remain intact and so its ruthlessly exploitative policies lead to economic downturn, if not collapse. So, all people’s legitimate democratic movements in various forms ought to be so conducted as to be conducive to the greater struggle of overthrowing capitalism by successfully accomplishing anti-capitalist socialist revolution after fulfilling necessary subjective and objective conditions. We fervently appeal to the suffering British people to ponder over this and expedite emancipation from the yoke of capitalism.
(Refs:
- https://theconversation.com/the-uk-is-facing-an-economic-crisis-heres-why-it-needs-to-find-a-global-solution-192823
- https://www.theatlantic.com/newsletters/archive/2022/10/uk-economy-disaster-degrowth-brexit/671847/
- https://www.economicshelp.org/blog/170353/economics/problems-facing-uk-economy-2022
- https://www.theguardian.com/business/2022/jul/08/six-charts-that-show-how-the-uk-economy-is-in-crisis
- https://www.telegraph.co.uk/business/inclusive-capitalism/social-issues-being-tackled/?
- https://quakersocialaction.org.uk/sharing-our-learning/poverty-uk?gclid=CjwKCAiAu5agBhBzEiwAdiR5tLyPA2uVsuqltFPO9nP-90jWxU43w48cgT
- BBC)
- drishtiias 23.03.23
