Vol. 74/No. 15      April 19, 2010

The Labour government and its prime minister, Gordon Brown, are taking credit for an economic turnaround. They cite £1 trillion-worth ($1.52 trillion) of stimulus packages, the nationalization of three major banks and part control of a fourth, low interest rates set by the Bank of England, and fewer unemployed because “of the action that we have taken.” Recovery would be threatened by an election victory for the opposition Conservatives, Brown argues.

In order to gain electoral advantage Labour seized on announcements last year of a Conservative Party-declared “age of austerity” and support for “savage cuts” by the Liberal Democrats to draw working people into backing Labour’s supposedly more humane “hard choices.” But the underlying features of the financial crisis remain and economic contraction will continue, whichever capitalist party wins the election.  
 
Bank lending at record low
The banks made some rapid profits off the government stimulus program. Bank lending, however, which is decisive to economic recovery under capitalism, continues to decline at record levels. Companies facing pressure on profits are reluctant to borrow no matter how cheap the money is. At the same time, banks are refusing to lend, given the perilous state of their finances. One bank, the Royal Bank of Scotland, has bad debts of around £300 billion.

In fact, UK banks are presently calling in more money from businesses than they are lending out.

The stimulus packages have resulted in government debt rising sharply. Government borrowing has climbed to an unprecedented 11.8 percent of gross domestic product.

Credit rating agencies have said that they are considering downgrading the UK’s status, putting the British economy in the same bracket as Greece and Portugal.

In the face of this, both the Labour and Conservative parties have announced that they will drive through public spending cuts.

Trade unionists trying to defend themselves are facing an increasing number of legal challenges to strike action.

Both government and opposition party leaders have denounced striking British Airways cabin crews; simultaneously cranking up the factional attacks on one another. Conservative leader David Cameron has charged that the unions have taken action sensing government weakness. The prime minister replied that days lost due to strike action under Labour is one-tenth of what it was under the previous Conservative government.

Conservative Party leader Cameron said he was “delighted” by a recent speech by Brown in which he said to immigrants that those “who think they can get away without making a contribution; without respecting our way of life; without honoring the values that make Britain what it is—I have only one message—you are not welcome.”

Such scapegoating is designed to take eyes off the capitalist system as the cause of the crisis facing working people.

The effects of the sharpening economic crisis combined with nationalist appeals in support of the war in Afghanistan and scapegoating of immigrants by the main capitalist parties have also put wind in the sails of rightist groups.

The UK Independence Party, which calls for a five-year freeze on immigration, won 13 seats in the European parliament last year. The ultraright British National Party, which emerged from the neofascist National Front and calls for a ban on all immigration along with “voluntary repatriation,” won two seats in the European parliament and has notched up 46 local councillors. A street thug outfit called the English Defence League has organized a country-wide campaign of demonstrations targeting Muslims.
 
 
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