England, Wales and Scotland section of International Socialist Alternative

No end for Britain’s economic woes

By Becci Yates

The most popularly searched term on the Financial Times website in 2022 was ‘inflation’, and it will continue to plague 2023. It’s likely to be one of the main triggers for the upcoming recession – a recession predicted to be longer and deeper in the UK than any other Western country.

Rishi Sunak is using inflation as one of the excuses for not giving public sector workers a pay rise, claiming that it will make it worse. It is nonsensical, though, as most workers can see. Prices are soaring despite the fact that real-term pay has been falling year-on-year for the majority of us! Poverty levels shot up, and according to the Joseph Rowntree Foundation, 250,000 households are expected to ‘slide into destitution’ in the next year. The prospect of pauperisation of the working class is reality as swathes struggle to afford the bare necessities of life.

It is not just the lowest paid or those unable to work, but many better paid workers and middle class people who are feeling the pinch. Food inflation hit 16% in November 2022 – the highest for 45 years – but is not expected to peak there. The already miniscule cost of living subsidies provided by the government will stop for most people in April, when prices are predicted to continue to climb.

On this basis, even if ‘improved’ offers are made to striking workers, but proposed increases are still below inflation, they are likely to be rejected as they have been in Scotland by NHS workers. The coming recession will force workers to fight harder for what they need to survive.

Fight for a pay rise

Jeremy Hunt baulks at the idea of giving more money to public sector workers, instead looking to reboot austerity and give out more contracts to his cronies. Underfunding of public services is actually contributing to the coming recession, rather than saving the state money to spend elsewhere.

The collapsing rail and mail services, since privatisation, are impacting negatively on businesses and the economy as well as those who work in them.

Attempts to prop up the NHS and the education system, as the government desperately tries to recruit and retain more health and education workers, will only add to the money being wasted on private contracts and short-term solutions, whilst not dealing with the structural problems.

Prices are not determined by wages. Prices are decided chiefly by the value of the product, how much work has gone into producing it, as well as by supply and demand. If the capitalists could just decide to raise prices, they would do it because it would mean they would boost their profits. However, they need to be able to compete with other companies and they need workers to be able to afford to buy their products.

The rising cost of living means that people will in fact spend less on many items, as their money is spent on food, bills and keeping a roof over their head. Many industries will experience a drop in demand.

Bigger profits are not gained by raising prices, supposedly passing on the ‘cost’ of higher wages to the consumer. Profits are the unpaid work of the working class – achieved by paying workers less than the full value of what they produce. So it is not increasing wages that leads to inflation, but the quest for profit.

This is also the reason for the focus on ‘productivity’ – given as the reason why rail workers should not get a pay rise and should accept job cuts. More than a million days were lost to strike action last year, which the government also blames for low productivity.

Productivity isn’t mainly about how hard people are working, though. Britain’s low productivity growth reflects the fact that the capitalist class are not investing in technological development and other forms of innovation to find ways of creating more wealth with the same amount of effort by workers. Instead they rely on attempting to force us to work more intensively – despite the clear limits on how much (if any) further intensification of work is really possible for workers who are often already at breaking point.

The causes of inflation

Inflation is not caused by just one factor. Energy price increases are being driven by the global geo-political situation, in particular the Ukraine war. However, one reason the price rises have been worse in the UK is because of the near abolition of gas storage facilities. This is a result of the profiteering of privatised energy companies. It means we have to rely on last-minute imports from other countries and are most susceptible to shocks in the global market and supply chain. This reflects the overall decline of British capitalism – decades of little investment in infrastructure, including house insulation, the driving down of wages and working conditions and the storing up of sovereign debt have created a perfect storm of inflation and stagnation.

Faced with this, the Bank of England has increased interest rates, with further rises potentially on the way. The Bank’s aim is to reduce the amount of money in circulation to bring down inflation rates to the target of 2%, despite knowing that this will likely push the economy into recession. Whilst this will bring misery to millions of ordinary people, the government will continue to step in to bail out and underwrite the profits of huge private companies: energy and rail last year, steel companies already this year, and potentially banks in the future months.

If it were down to the capitalist class, 2023 would be looking very bleak. The situation will be extremely difficult for many. However Socialist Alternative is optimistic about the potential for this to be a year in which the workers’ movement is able to push back against this crisis and win important victories. 2022’s wave of strikes showed that the working class is not prepared to accept this dire diet being offered. Some other terms that saw an explosion on search engines were “Mick Lynch”, “how to strike” and “join a union”. Strikes still receive huge levels of public support, despite the constant attacks the unions receive in the mainstream media.

This indicates that the battle lines have been drawn and millions are deciding which side they are on. If it wasn’t for the restrictive anti-trade union laws, many more would be on strike. The unions will need to seriously organise against the attempt to further restrict the right to strike by outlawing strikes for more workers – including breaking the law where necessary.

The momentum is with the strikers

It is clear that the Tories can provide no alternative, with three Prime Ministers and Chancellors last year alone. Luckily, we don’t have to rely on them. The working class has gone on the offensive and the cracks in the ruling class are beginning to show.

The strike wave is growing. Half a million took action together on 1 February, with massive potential for this to deepen. Amazon workers in Coventry and inevitably more will be joining rail workers, teachers, posties, education workers, nurses, ambulance workers, baggage handlers, border guards, highway workers, bus drivers, driving examiners and more. These disputes should now coordinate their strike days. Mass picket lines and joint demonstrations should be mobilised to reflect the levels of support and build on that existing support further.

On the basis of this, as part of a strategy to build general strike either on March 15-16 or coming out of it, the Tories and bosses could be forced to make concessions. More than this, it would likely throw this chaotic government of billionaires out of power.

2023 will also be a year that many will be drawing the conclusion that we need revolutionary change. If we are going to successfully resist the Tories’ agenda, we need to organise and fight for nationalisation of the main industries (rail, mail, the banks and so on) in the economy, to be run under democratic control by the working class, as part of an economy planned in the interests of the overwhelming majority.


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