The coalition’s first budget, in June, was a budget for the banks and the City: those who caused the crisis are to be subsidised by the working class, the vast majority. Employers are defaulting on their debts to us when they close down our pension plans. We should default on what they want. How much longer can we put up with the disaster and farce that is capitalism in absolute decline?
The government aims to cut benefits by £11 billion, spending by £40 billion, and most departmental budgets by 25 per cent over the next four years.
Financial analysts Lombard Street Research criticised the G20’s failure to boost growth on 28 June. It said, “The chief effect of budget tightening will be to hammer global demand, causing a fresh recession.” Even the government’s own Office for Budget Responsibility pointed out that the proposed spending cuts would cut output next year. It forecast three years of falling wages and warned that the budget increased the risks of another slump.
The Chartered Institute of Personnel and Development said that the budget would cut 725,000 public service jobs by 2015. The Treasury itself forecast that the budget would cost 1.3 million jobs by then, 600,000 in the public sector and 700,000 in the private sector. The government absurdly said that the biggest private sector boom ever, of 6 per cent growth a year, would fill the gap left by the cuts.
The budget brought a smaller than expected rise in capital gains tax, to 28 per cent on higher-rate taxpayers, and a £2 billion levy on the banks. It didn’t touch bankers’ bonuses, despite earlier talk of ending ‘unacceptable bonuses’. It cut corporation tax from 28 per cent to 26 per cent in 2012 and 24 per cent over the next two years. Deutsche Bank said, “Taking 2 per cent off the 2012 tax rate for the five banks listed in the UK would increase profit by £1.16 billion, that is it should almost offset all of the banks tax. Overall a good outcome for the banks.”
The banks are doing very nicely, but they still aren’t lending, so many small businesses are going under. Goldman Sachs lost its clients a billion dollars, but still paid its partners bonuses of $3.8 billion last year. (It recently paid a $550 million fine, the biggest ever levied on a Wall Street bank, for deceiving its clients about Abacus, a subprime mortgage-backed financial instrument, whose designer aimed to sell it short.)
The government wants to freeze public sector pay for two years. By contrast, since 2008, the salaries of the CEOs of Britain’s top listed companies have risen by 5 per cent, to an average £3.1 million. Their salary packages have quadrupled since 2000, while share prices have fallen.