No let up for the recession during the festive season
At this time of year the financial burden of ordinary people becomes all too obvious – struggling to maintain basic living standards over the Christmas period on dwindling personal incomes and savings, while the state of the economy is thrown into sharp relief by the Alistair Darling’s recent pre-budget report.
Households throughout the UK are taking no comfort from the Chancellor’s proposals to the House of Commons, coming at a time when the public sector as a whole is taking a battering from the failings of New Labour’s neo-liberalism policy. The looming clouds of recession still hang over the country despite the financial juggling and manipulation of figures by government ministers to downplay the continuing severity of the current economic crisis.
As it stands the total government debt will double to 79% of Gross Domestic Product (GDP) by 2013 – the highest level since the Second World War, the annual budget deficit will rise to £175bn for the next two years, while continuing to pay for the banking bailouts and wars in the Middle East. According to the pre-budget report the government is to lessen some of its debt burden by selling off the nation’s assets to the private sector including the student loans portfolio, the Channel tunnel rail link and the Tote. More significantly there will be a cap of 1% on the 3.9m public sector workers pay settlements for two years from 2011, in an attempt to claw back £15bn on ‘inefficiency savings’.
The cornerstone of neo-liberalism as economic policy is based on freeing financial markets from state regulation but also transferring control of state enterprises to the private sector, and with it relinquishing the once universal guarantee of social rights. Under New Labour education, health and social services have become simple commodities to be competed over and at the mercy of market forces.
What we are left with are ordinary people forced to bear the brunt of the failings of the financial markets and its institutions and a bankrupt government agenda, through cuts in services, jobs, public spending and increase in taxes, leading to an escalation is personal borrowing and debt, from the very institutions that caused the recession.
According to the Office of National Statistics, 19.3 million households – nearly 80% of the total – have incurred an average of £7,200 each on credit cards, loans and other non-mortgage related debts and Barclays, the UK’s biggest credit card lender with 11.7 million UK customers, reported a significant increase in UK credit card delinquencies, defaulting on repayments.
Conversely top executives at Goldman Sachs, the world’s most powerful invest-ment bank, are to receive the biggest bonus payouts in the firm’s 140-year history. In the same week The Bank of England’s deputy governor admitted at a Treasury select committee that both the Royal Bank of Scotland and HBOS came within minutes of closing cashpoints and normal business operations at the height of the financial crisis last year just before extending £61.6bn in emergency funds to the banks.
