We’re not broke. We’re not at the mercy of foreign investors. And the working class could rebuild Britain – but first it has to force its way into the driving seat...
Those commentators who are paid to depict capitalism in bright colours usually quote something along the lines that international investors have only lent Britain capital at such low rates of interest on the condition that state overspending is brought under control. But the fact is Britain has adequate scope to rebuild as we have plenty of access to inexpensive long-term domestic finance.
Rather than giving serious thought to the supervision and regulation of monopoly banking why not first examine the nature of UK government debt. Then the question of reorganising British banking can begin to be properly addressed.
Commentators often quite deliberately interchange the terms government debt (i.e. the accumulated total of budgetary shortfalls for years in the past) and government deficit (i.e. the estimated budgetary shortfall for the current financial year). The intention here is to confuse the ill-informed so that the government can justify the attacks on our living standards.
At present Britain’s anticipated government deficit is 11 per cent, which simply means that after annual revenue sourced mostly from taxes, government expenditure for 2011/12 is estimated to exceed revenue by 11 per cent (£122 billion); total government debt as a proportion of GDP is 68 per cent (£900 billion). Compare these figures to those laid down in the Maastricht Treaty that was signed by Thatcher in the 1990s. The treaty dictates that EU governments should not incur debt greater than 60 per cent of GDP and run an annual deficit of more than 3 per cent. So from a British perspective this suggests that rather than the image of “spiralling out of control” things are not so out of line against their own Maastricht criteria.
Look at Europe!
Our £900 billion of debt, 68 per cent of GDP, has an average maturity of 14 years, against the average in German-occupied Europe of 79 per cent of GDP and maturity of just 8 years. Greece tops the league with a debt of 160 per cent of its GDP.
Significantly, the length to maturity for each tranche of British government debt is evenly spread. This gives flexibility and allows planning to occur in line with the scheduled dates when each tranche of debt falls due. For example only 20 per cent of our government debt was due to mature between June 2010 and June 2013.
Compare this with Italy: it has some 220 billion of its total debt of 1,900 billion euros set to mature over the next couple of months. The Italian government has to immediately repay 220 billion euros, or find new creditors now willing to lend on revised terms. Italy’s finance minister has recently said that his country’s fate is now entirely in the hands of Berlin.
We should also look at the argument that we are now perilously dependent upon international investors upon whom this country relies to stave off bankruptcy. Is this true, or just nonsense?
“It’s time for us to turn
the tables and insist that
we rebuild our country...”
Not surprisingly, it’s nonsense: the fact is 80 per cent of British government debt is facilitated through long-term credit provided by Britain’s occupational pension funds and insurance companies. So forget the bogey man in the form of the international investor. We are the bogey man for it is our pension fund capital and insured savings that is by and large used to cover their debt and make up their annual deficit shortfall.
The Coalition is currently looking to raise a further £300 billion from our funds over the next three years. As no one else wants to buy government debt, this will also signal the start of the transfer of £275 billion of quantitative easing from the Bank of England’s balance sheet over to our pension funds and insured savings.
During this process the government and their apologists intend to bleat that international markets insist that we should wreck our health service/education or whatever else that is civilised in our country. Should we just accept this? Clearly no, because the figures show it is plainly the workers who are servicing government debt and who should be in the driving seat when it comes to deciding how.
So what could be done? For one thing, we have to import huge volumes of goods that hitherto were manufactured in Britain. Even though our currency exchange rate has fallen by 25 per cent over the past couple of years this has not helped our exports as much as it has raised the costs of imports, leading to price inflation.
But unlike previous occasions in our industrial history, we do not have the immediate ability to increase our exports or to substitute what we are now importing with better priced British manufacture. This is due to 30 years of politically inspired industrial destruction. It’s time for us to turn the tables and insist that we rebuild our country.
To try to deflect attention away from this question, we now hear that for Britain to prosper, we need a strong and growing Europe. Wrong. What we need to do instead is to place our destiny into our own hands and rebuild Britain. But this terrifies those that are clinging on to power because to rebuild, to remove mass unemployment, would make British working people a political threat – better the debilitating virus of deindustrialisation to keep us on our knees.
What is needed above all else is a determination to face up to and speak the truth. Facts are stubborn things and the fact is that economic outcomes are determined by philosophy, which class perspective you are coming from. So for a successful economic outcome we need to change the philosophy and raise ourselves and our horizons above the absurd mumbo jumbo of the paper world of the credit system.
Britain has sufficient capital, sufficient real wealth, to do this. So the term “spiralling out of control” so often used in the media is an exaggeration designed to catch and encourage the gullible to give up all the gains that working people have won through trade union actions over the past 150 years or more. ■