https://www.youtube.com/watch?v=q-mQTim18o8&feature
Friday, August 14, 2020
Germany: SPD nominates Finance Minister Scholz as its candidate for chancellor
https://www.wsws.org/en/articles/2020/08/13/scho-a13.html
By Peter Schwarz
13 August 2020
On Monday, the leadership committee of the Social Democratic Party (SPD) unanimously nominated Olaf Scholz as their candidate for chancellor for the federal elections in autumn 2021. They have thus made a decision that fits the character of the SPD perfectly. Scholz, the current vice-chancellor and finance minister in the grand coalition with the Christian Democrats headed by Merkel, embodies the right-wing policies of a party that has absolutely nothing in common with its former roots in the workers’ movement.
Scholz’s nomination is a signal to the financial oligarchy and the right-wing elements in the state apparatus that they can rely on the SPD without reservation in the face of growing social conflicts. There has been no attack on social and democratic rights in the last two decades in which Scholz has not been personally involved.
The coronavirus pandemic has lent an extraordinary sharpness to the social antagonisms and international tensions that have been developing for a long time. Resistance is growing in factories, schools and hospitals; trade wars and the threat of war are spreading; democratic structures are collapsing; and opposition to capitalism is mounting. Under these circumstances, the SPD has decided to abandon the usual political fig-leaves and openly proclaim its right-wing policies by appointing Scholz as candidate for chancellor more than a year before Election Day.
Just last year, the party had organised a travelling circus lasting for weeks, in which seven pairs of candidates competed for the party chairmanship at 23 regional conferences, pretending to be grassroots democrats. Scholz had experienced a humiliating defeat at that time. He and his partner Klara Geywitz were defeated in the second round of voting by the duo Norbert Walter-Borjans and Saskia Esken, who have led the party ever since. The two had passed themselves off as left-wing critics of the grand coalition, supported by Juso (Young Socialist) Chairman Kevin Kühnert, the spokesman for the GroKo opponents in the 2018 SPD member survey.
At the time, the WSWS rejected this deception. After the election of the new SPD leadership, we commented, “The claim that Walter-Borjans and Esken pursued a different policy, embodied a left-wing of the party and rejected the Grand Coalition is a myth that does not stand up to serious scrutiny.”
Now, Walter-Borjans and Esken have proposed the defeated Scholz as the party’s candidate for chancellor, which means that he sets the course of the party. Juso leader Kühnert also supports Scholz. He justified this with the words, “We are doing this in the knowledge and recognition that we—and this is the difference to past years—are running in a common direction.” Kühnert appealed to the party’s supposed “left wing” to engage constructively in the debate. “We are also capable of learning,” he said.
By “common direction,” Kühnert meant the billions and trillions of euros that Finance Minister Scholz forked over to the banks and large companies during the coronavirus crisis. This is not a break with his previous austerity course, the “black zero” (balanced budget) policy, but rather its continuation by other means. It continues the enrichment of the wealthy at the expense of the poor, which the grand coalition has been pursuing for years.
For example, of the €756 billion in the emergency package adopted by the federal government in March, €600 billion went to large companies, €50 billion to small firms and the self-employed (who make up 58 percent of all employees subject to social security contributions), several billion went to armaments spending and nothing to education and social welfare. In addition, Scholz is already planning to recoup the gifts made to corporations and the rich through further social cuts.
This policy in the interest of the financial oligarchy runs like a red thread through Scholz’s political career.
Born in 1958 as the son of a civil servant, he studied law in Hamburg and began his political career with the Jusos, where he, like Helmut Schmidt, Andrea Nahles and many other prominent SPD leaders, employed left-wing and pseudo-Marxist phraseology. From 1982 to 1988, the representative of the so-called Stamokap (state monopoly capitalism) wing was deputy federal chairman of the SPD youth organisation.
In 1998, Scholz was elected to the Bundestag (federal parliament). In 2001, he took over the office of the Interior Senator (state minister) in the Hamburg state executive. Even then, he attracted attention as a law-and-order politician because he introduced the compulsory administration of emetics to drug dealers to preserve evidence, which the European Court of Human Rights later condemned as contrary to human rights.
In 2002, Chancellor Gerhard Schröder brought him to Berlin as SPD secretary-general to enforce his government’s attacks on welfare and labour rights against massive resistance. In 2007, he was rewarded for this with the office of minister of labour in Merkel’s first cabinet. In this function, he raised the retirement age from 65 to 67 years.
From 2011 to 2018, Scholz was mayor of Hamburg, where he again stood out for his close relationship with big business and his law-and-order policies. Among other things, Scholz is responsible for the brutal police action against the G20 demonstrations in the summer of 2017, one of the largest police deployments in German history, which served to criminalise hundreds of young people who were exercising their right to demonstrate.
In 2018, Scholz then became one of the driving forces in the SPD advocating the continuation of the grand coalition with the Christian Democrats to implement a programme of social cuts, the strengthening of state powers and militarism. By joining the grand coalition, the SPD also specifically helped the far-right Alternative for Germany (AfD) become the leader of the parliamentary opposition, which greatly increased its influence, despite it winning only 13.5 percent of the vote.
In Merkel’s fourth cabinet, Scholz took over the office of finance minister from Wolfgang Schäuble (CDU) and continued his austerity course in Europe and Germany. To prove his loyalty to the banks, he brought the German head of the major US bank Goldman Sachs, Jörg Kukies, into his ministry as state secretary.
Until the end of last year, Kukies maintained close contacts with the Dax-listed Wirecard Group, which has since gone bankrupt and whose managers are in custody for fraudulent accounting, market manipulation, embezzlement and money laundering. The fact that Wirecard has been subject to the supervisory authorities of the Finance Ministry for years could still create problems for Scholz.
Scholz’s nomination is a clear commitment to continue the grand coalition, the most right-wing government since the Federal Republic of Germany was founded following World War Two. Scholz’s relationship with Chancellor Merkel is now so close that the Süddeutsche Zeitung felt compelled to comment, “Vice-Chancellor Scholz could certainly be successful in reaching out to voters who would like to see Angela Merkel’s government continue.”
However, Scholz’s nomination also means he is prepared to govern together with the Greens or the Left Party, which pursue the same reactionary policies.
Asked by Neues Deutschland about possible collaboration with Scholz, Left Party leader Riexinger immediately signalled his approval. “The decisive factor is whether there is agreement on content,” he said. “We heard interesting announcements from the SPD leadership over the weekend: they want to overcome the Hartz IV system [of welfare attacks] and abolish sanctions, something the Left Party has long been calling for. They want a significantly higher minimum wage, and the rich to be taxed more heavily.”
Riexinger, of course, does not believe that Scholz—who is himself described by the bourgeois press as the SPD’s right-wing frontman—and the SPD have suddenly changed. What is clear is his willingness to cooperate with a Scholz-led SPD.
13 August 2020
On Monday, the leadership committee of the Social Democratic Party (SPD) unanimously nominated Olaf Scholz as their candidate for chancellor for the federal elections in autumn 2021. They have thus made a decision that fits the character of the SPD perfectly. Scholz, the current vice-chancellor and finance minister in the grand coalition with the Christian Democrats headed by Merkel, embodies the right-wing policies of a party that has absolutely nothing in common with its former roots in the workers’ movement.
Scholz’s nomination is a signal to the financial oligarchy and the right-wing elements in the state apparatus that they can rely on the SPD without reservation in the face of growing social conflicts. There has been no attack on social and democratic rights in the last two decades in which Scholz has not been personally involved.
The coronavirus pandemic has lent an extraordinary sharpness to the social antagonisms and international tensions that have been developing for a long time. Resistance is growing in factories, schools and hospitals; trade wars and the threat of war are spreading; democratic structures are collapsing; and opposition to capitalism is mounting. Under these circumstances, the SPD has decided to abandon the usual political fig-leaves and openly proclaim its right-wing policies by appointing Scholz as candidate for chancellor more than a year before Election Day.
Just last year, the party had organised a travelling circus lasting for weeks, in which seven pairs of candidates competed for the party chairmanship at 23 regional conferences, pretending to be grassroots democrats. Scholz had experienced a humiliating defeat at that time. He and his partner Klara Geywitz were defeated in the second round of voting by the duo Norbert Walter-Borjans and Saskia Esken, who have led the party ever since. The two had passed themselves off as left-wing critics of the grand coalition, supported by Juso (Young Socialist) Chairman Kevin Kühnert, the spokesman for the GroKo opponents in the 2018 SPD member survey.
At the time, the WSWS rejected this deception. After the election of the new SPD leadership, we commented, “The claim that Walter-Borjans and Esken pursued a different policy, embodied a left-wing of the party and rejected the Grand Coalition is a myth that does not stand up to serious scrutiny.”
Now, Walter-Borjans and Esken have proposed the defeated Scholz as the party’s candidate for chancellor, which means that he sets the course of the party. Juso leader Kühnert also supports Scholz. He justified this with the words, “We are doing this in the knowledge and recognition that we—and this is the difference to past years—are running in a common direction.” Kühnert appealed to the party’s supposed “left wing” to engage constructively in the debate. “We are also capable of learning,” he said.
By “common direction,” Kühnert meant the billions and trillions of euros that Finance Minister Scholz forked over to the banks and large companies during the coronavirus crisis. This is not a break with his previous austerity course, the “black zero” (balanced budget) policy, but rather its continuation by other means. It continues the enrichment of the wealthy at the expense of the poor, which the grand coalition has been pursuing for years.
For example, of the €756 billion in the emergency package adopted by the federal government in March, €600 billion went to large companies, €50 billion to small firms and the self-employed (who make up 58 percent of all employees subject to social security contributions), several billion went to armaments spending and nothing to education and social welfare. In addition, Scholz is already planning to recoup the gifts made to corporations and the rich through further social cuts.
This policy in the interest of the financial oligarchy runs like a red thread through Scholz’s political career.
Born in 1958 as the son of a civil servant, he studied law in Hamburg and began his political career with the Jusos, where he, like Helmut Schmidt, Andrea Nahles and many other prominent SPD leaders, employed left-wing and pseudo-Marxist phraseology. From 1982 to 1988, the representative of the so-called Stamokap (state monopoly capitalism) wing was deputy federal chairman of the SPD youth organisation.
In 1998, Scholz was elected to the Bundestag (federal parliament). In 2001, he took over the office of the Interior Senator (state minister) in the Hamburg state executive. Even then, he attracted attention as a law-and-order politician because he introduced the compulsory administration of emetics to drug dealers to preserve evidence, which the European Court of Human Rights later condemned as contrary to human rights.
In 2002, Chancellor Gerhard Schröder brought him to Berlin as SPD secretary-general to enforce his government’s attacks on welfare and labour rights against massive resistance. In 2007, he was rewarded for this with the office of minister of labour in Merkel’s first cabinet. In this function, he raised the retirement age from 65 to 67 years.
From 2011 to 2018, Scholz was mayor of Hamburg, where he again stood out for his close relationship with big business and his law-and-order policies. Among other things, Scholz is responsible for the brutal police action against the G20 demonstrations in the summer of 2017, one of the largest police deployments in German history, which served to criminalise hundreds of young people who were exercising their right to demonstrate.
In 2018, Scholz then became one of the driving forces in the SPD advocating the continuation of the grand coalition with the Christian Democrats to implement a programme of social cuts, the strengthening of state powers and militarism. By joining the grand coalition, the SPD also specifically helped the far-right Alternative for Germany (AfD) become the leader of the parliamentary opposition, which greatly increased its influence, despite it winning only 13.5 percent of the vote.
In Merkel’s fourth cabinet, Scholz took over the office of finance minister from Wolfgang Schäuble (CDU) and continued his austerity course in Europe and Germany. To prove his loyalty to the banks, he brought the German head of the major US bank Goldman Sachs, Jörg Kukies, into his ministry as state secretary.
Until the end of last year, Kukies maintained close contacts with the Dax-listed Wirecard Group, which has since gone bankrupt and whose managers are in custody for fraudulent accounting, market manipulation, embezzlement and money laundering. The fact that Wirecard has been subject to the supervisory authorities of the Finance Ministry for years could still create problems for Scholz.
Scholz’s nomination is a clear commitment to continue the grand coalition, the most right-wing government since the Federal Republic of Germany was founded following World War Two. Scholz’s relationship with Chancellor Merkel is now so close that the Süddeutsche Zeitung felt compelled to comment, “Vice-Chancellor Scholz could certainly be successful in reaching out to voters who would like to see Angela Merkel’s government continue.”
However, Scholz’s nomination also means he is prepared to govern together with the Greens or the Left Party, which pursue the same reactionary policies.
Asked by Neues Deutschland about possible collaboration with Scholz, Left Party leader Riexinger immediately signalled his approval. “The decisive factor is whether there is agreement on content,” he said. “We heard interesting announcements from the SPD leadership over the weekend: they want to overcome the Hartz IV system [of welfare attacks] and abolish sanctions, something the Left Party has long been calling for. They want a significantly higher minimum wage, and the rich to be taxed more heavily.”
Riexinger, of course, does not believe that Scholz—who is himself described by the bourgeois press as the SPD’s right-wing frontman—and the SPD have suddenly changed. What is clear is his willingness to cooperate with a Scholz-led SPD.
What Will Trump Do to the World to Win Re-Election? (FPIF)
Heightened tensions in the South China Sea, an outbreak of hostilities along the India-China border, mysterious "accidents" at Iran's nuclear facilities: the major powers are still dealing with the coronavirus pandemic, but they apparently still have time to devote to military conflict.
For Donald Trump, stoking tensions with China and Iran have the additional "benefit" of distracting attention from his woeful record of dealing with COVID-19 and the collapse of the U.S. economy. Indeed, as I write in my World Beat column this week, provoking a crisis with either China or Iran might be just the October surprise the president is planning as a last-ditch effort to gain re-election.
Also this week at Foreign Policy In Focus, columnist Conn Hallinan digs deeper into the India-China tensions to discover the root conflicts over energy and water. Meanwhile, Medea Benjamin and Nicolas Davies explore the self-defeating Cold War that the United States is pursuing with China.
My colleague Olivia Alperstein, on the occasion of the 75th anniversary of the dropping of the atomic bombs on Hiroshima and Nagasaki, urges the U.S. government to apologize for the act and work to rid the world of these terrible weapons. And my colleague Khury Petersen-Smith discusses how widely the abusive agencies of "homeland security" have misinterpreted their responsibilities and jurisdiction -- and it's not just about Portland.
Finally, Elizabeth Schmidt investigates the huge toll that COVID-19 is taking in Africa. And I look at the death cult of individualism that is attracting more and more followers in the United States in this pandemic era.
John Feffer
Director, FPIF
World Beat
What Will Trump Do to the World to Win Re-Election?
John Feffer
Trump shrugged at 150,000 U.S. COVID-19 deaths. Who’s to say he’s above starting a fight with China or Iran?
Read World Beat...
Our Features
The U.S. Should Apologize for the Atomic Bombings — And Denuclearize
Olivia Alperstein
Seventy-five years after the atomic bombings, we’re still engaging in a false narrative to justify the unjustifiable.
The Backstory to Portland? Two Decades of ‘Homeland Security’
Khury Petersen-Smith
The repression we saw in Portland wasn’t new — only the targets were.
Trump’s Cold War China Policy Will Isolate the U.S., Not China
Medea Benjamin, Nicolas J.S. Davies
The United States must stop pursuing its counterproductive effort to undermine China and instead work with all our neighbors on this small planet.
COVID-19 Is a Huge Threat to Stability in Africa
Elizabeth Schmidt
Ongoing conflicts combined with escalating poverty and repression could amplify the pandemic’s social cost.
America’s Multiple Infections
John Feffer
Too many Americans belong to the cult of selfish individualism. In the COVID era, this has become a death cult.
India and China: Behind the Conflict
Conn Hallinan
The two most populous countries in the world are battling over a border, but it’s really about energy and water.
The Fed Can Still Save State and Local Governments Plus, more postal turmoil
Unsanitized: The COVID-19 Report for Aug. 13, 2020
The Fed Can Still Save State and Local Governments
Plus, more postal turmoil
Forget about road construction, like this water main cleanup in Los Angeles in 2018, without state and local government aid. (Reed Saxon/AP Photo)
First Response
Until my cunning plan to sue every corporation in America comes to fruition, the prospect of a bipartisan deal on coronavirus relief looks remote. There was a grim phone call yesterday that just reiterated the stalemate. President Trump said in his press conference yesterday that a deal “is not going to happen.”
This is particularly distressing for state and local governments, where the two sides are furthest apart. Initially Democrats sought $900 billion in new money while Republicans offered nothing; later the Republican offer came up to a token $150 billion. The only impact on state and local budgets in the Trump executive actions are additional costs to administer the new unemployment benefit.
State and local spending already fell 5.6 percent in the second quarter, and more than 1 million jobs have been cut through July. With no deal, we can expect cuts that could cancel as many as 4 million jobs and slash 3 percent out of GDP. It’s the kind of mindless austerity that held the recovery back after the Great Recession, layered on top of a continuing public health emergency. “Due to Congress’ inaction, the ability of state and local governments to deliver critical services to the American people is now in serious jeopardy,” read a statement from seven organizations representing states, cities, counties, and other local governments.
In the absence of Congress and the White House, the Federal Reserve has become the only game in town for state and local government. They have a Municipal Liquidity Facility, authorized in the CARES Act, which would give some relief with ongoing costs, while adding more borrowing. But to date, it’s been used exactly one time, by the state of Illinois, for $1.2 billion.
Read all of our Unsanitized reports here
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One problem with the program is that it costs too much and leaves too many states and cities out; by one estimate, 255 municipal entities are eligible for the program, but 97 percent would be “functionally excluded” because the penalty interest rates make it cheaper for them to borrow on the municipal bond markets.
The Fed assisted with that earlier this week, lowering interest rates on short-term notes. But they did not do what several progressive House members requested: lower the rates equivalent to the federal funds rate (i.e. zero), extend the maturity to at least five years, and make smaller cities and counties eligible.
Keep in mind that the Fed has bought over 800 companies’ corporate bonds, because they had to keep their promises according to chair Jerome Powell, but the municipal lending is stuck on 1. Some regional Fed presidents have intimated that Treasury is holding up bigger changes on funds to which it contributed its CARES Act share. Others have said that states don’t need liquidity, they need grants, and the central bank’s hands are tied.
Darien Shanske, a UC-Davis professor of law and political science, figured out a way to untie those hands months ago. In a paper co-written with Indiana University’s David Gamage, Shanske lays out how there’s a way to avoid Treasury’s effective veto on the program by lending under the Fed’s Section 14 authority rather than the Section 13 authority being used now. Under those powers, the Fed can purchase six-month notes without needing an equity backstop from elsewhere. The way to extend the terms is to commit to re-purchase the notes every six months for twenty years, with a sliding schedule of repayment of principal. Most localities have a short-term borrowing exception that could make this work.
This sort of creates an operating deficit option in state and local governments for a period. And of course, if you can roll over the notes for 20 years you can commit to doing it for 100, or however long it takes to make these loans effectively grants. I offered a version of this option back in June, and now it’s become if anything more critical. Congress is not stepping in and millions of jobs are at stake. It’s time to unveil this option. Every day the Fed doesn’t is a choice.
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Mail Pattern Boldness
The situation with the Postal Service has begun to hit a critical mass. Clearly the Capitol Forum’s reporting was correct, and there is a gouging in progress with the aforementioned state and local governments over postage for ballot delivery. Top postal officials are claiming that they’re just advising governments about the standard timelines for delivery on marketing mail relative to first class, but in the past, political mailings have been treated like first class mail, according to everyone involved with the process.
This is just a pretense to make ballot mailing less affordable and induce some states or localities to change their practices. California Secretary of State Alex Padilla explicitly calls them “proposed changes to postal service and pricing.” Anyone who doubted that this was happening should doubt no longer.
Meanwhile, mail sorting equipment is vanishing from post offices, and tens of thousands of letters are piling up even in relatively small communities. As far as the election is concerned, Trump openly admitted today that he’s holding up any funding to facilitate mail-in voting. “If we don’t make the deal, that means they can’t have the money, that means they can’t have universal mail-in voting,” he told Fox Business.
I don’t think strongly worded letters are going to cut it, at least not from one party. This is an attack on commerce in America, and a theft in progress of the vote.
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Today I Learned
Weekly jobless claims went under 1 million for the first time in five months. There are still 29 million taking unemployment benefits though, now without a $600 enhancement. (Calculated Risk)
Yesterday was the deadliest for official listed fatalities since May. The data seem to presage a peak within days, but gaps in the stats make that uncertain. (Axios)
Other exposures to different coronaviruses, like the common cold, could give people immunity. (Miami Herald)
Frozen chicken in China imported from Brazil tests positive for COVID-19. (Reuters)
Life in a coronavirus vaccine trial. (CNBC)
That high school in Georgia (the one with the hallway photo) is still closed after more positive cases. (WSB-TV)
Payouts for vaccines that don’t yet exist when the U.S. already paid for the R&D have shockingly not raised much anger. (Wall Street Journal)
AMC Theaters going YOLO and opening up starting next week. (The Verge)
UK in record recession as social catastrophe looms
https://www.wsws.org/en/articles/2020/08/13/rece-a13.html
By Thomas Scripps
13 August 2020
The UK is officially in the worst recession on record. Having recorded two consecutive quarters of declining GDP, Britain’s economy is the same size as it was in 2003, smaller than the lowest point reached during the 2008-9 financial crisis. The response of the Johnson government and the employers will be a brutal assault on the living standards of the working class.
After a fall of 2.2 percent in the first three months of the year, the UK economy plunged by more than a fifth (20.4 percent) in the next three months to the end of June. This is the biggest quarterly decline since records of similar statistics began to be kept in 1955. It is the worst experienced by any of the G7 nations—roughly double the decline suffered by Germany and the United States.
Britain has been especially hard-hit, in part due to the structure of its economy, heavily weighted towards the services sector, which accounts for 80 percent of output. Largely consumer-facing, this sector has been especially affected by social distancing and lockdown measures, and by the caution shown by the population in response to the COVID-19 virus.
Consumer spending was down 27.7 percent in May and was still 14.5 percent lower than a year earlier in June. Visits to retail destinations were down 39.4 percent last month nationally and down 69 percent in central London, which is more heavily dependent on tourists and office workers.
Services fell 19.9 percent last quarter—accounting for three quarters of the fall in total GDP—and recorded a relatively low uptick of 7.7 percent month-on-month in June. Manufacturing fell by 16.9 percent, followed by an 11 percent climb. Construction collapsed by 35 percent but has since jumped 23.5 percent.
Overall, including growth registered across the economy in May (2.4 percent) and June (8.7 percent) as public health measures were recklessly lifted, GDP is now 17.2 percent below its February level. The Bank of England (BoE) forecasts an annual fall for 2020 of 9.5 percent, the deepest drop since 1921 in the aftermath of the First World War, amid the collapse of British imperialism’s commanding world position.
The BoE predicts the recovery of GDP to slow significantly after the initial rebound, with output only reaching pre-pandemic levels at the end of 2021.
Things could be worse still. In May, the BoE forecast a 14 percent collapse in GDP, the worst recession in 300 years. The improved outlook was prompted by the earlier than expected easing of the lockdown and a more rapid pickup in some areas of consumer spending. However, the BoE is warning of “downside risks,” including a resurgence of COVID-19 that is guaranteed by the reckless ending of the lockdown.
The Office for National Statistics (ONS) has highlighted the risks posed by a lasting lag in business investment, down 31.4 percent since the first quarter, as nonessential spending is cut or postponed, especially in consumer-facing industries. Tom Stevenson, investment director at Fidelity International, told the Guardian, “No one knows exactly what the recovery from coronavirus will look like—particularly with the potential for a second wave of infections and further local lockdowns—but it is likely that it will be a slow crawl towards pre-COVID levels.”
The BoE is also worried about unemployment and the impact of job insecurity on spending. UK payrolls dropped 730,000 jobs between March and July, according to the ONS, and vacancies are 45 percent lower than a year earlier. The number of people claiming out-of-work benefits reached 2.7 million in July, double the level before the pandemic.
This situation will worsen dramatically after the government furlough scheme is ended in October. Around five million people were still on the scheme in June, according to the ONS. The Financial Times quotes Gerwyn Davies of the Chartered Institute of Personnel and Development (CIPD) saying, “A real concern is that this is just the first wave of bad news for the jobs market,” and Capital Economics consultancy’s Ruth Gregory warning, “This is just the lull before the storm.”
Research by the CIPD and recruiter Adecco, reported Monday, found a third of employers intended to make redundancies between July and September. The BBC obtained figures showing the number of firms notifying the government in June of their intention to cut 20 or more jobs was five times higher than in the same month last year.
Brexit and the prospect of higher tariffs in Europe paid by British companies are listed as another risk factor.
Even taken together, these warnings and announcements are only a snapshot of a developing crisis of British capitalism, itself only a specific manifestation of a world breakdown centred on the failure of the capitalist system to deal with the COVID-19 pandemic. The virus is out of control across the Americas and in resurgence across the world. Chancellor Rishi Sunak is reportedly considering delaying his autumn Budget until spring in the case of a new series of local lockdowns and a spike in coronavirus cases.
The content of the government’s economic plans, however, is already clear. Sunak told the BBC after the official figures on the recession were announced: “I’ve said before that hard times were ahead, and today’s figures confirm that hard times are here. Hundreds of thousands of people have already lost their jobs and, sadly, in the coming months many more will. But while there are difficult choices to be made ahead, we will get through this and I can assure people that nobody will be left without hope or opportunity.”
Workers have heard all this before. It will be followed by calls to “tighten belts” and “sacrifice” in the national interest. Mass unemployment, on a scale not seen in decades, will be used to enforce vicious cuts to wages and conditions. As in the crash of 2008-9, government debt will be used to justify the evisceration of essential social services.
The working class must reject all such demands. Only they are called on to make sacrifices. Trillions have already been handed to the super-rich globally, on the pretext of confronting a public health and economic catastrophe of capitalism’s own making after years of worsening social inequality, financial parasitism, and assaults on the social conditions of the working class. Now the pandemic rages on, and a further historic collapse in living standards is in preparation.
The money and assets looted by the super-rich must be reclaimed by the working class, and the corporations taken into public ownership, turned towards socially useful production, and placed under democratic control.
In the Labour Party and the trade unions, workers confront a hostile force that has worked hand-in-glove with the Conservative government throughout the pandemic and will continue to do so as the economic crisis deepens. A fightback against them all demands the formation of rank-and-file committees of workers, and the building of the revolutionary party, the Socialist Equality Party, to lead a struggle for socialism.
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Nearly 650,000 jobs lost in UK during pandemic, with much worse to come
[18 July 2020]
13 August 2020
The UK is officially in the worst recession on record. Having recorded two consecutive quarters of declining GDP, Britain’s economy is the same size as it was in 2003, smaller than the lowest point reached during the 2008-9 financial crisis. The response of the Johnson government and the employers will be a brutal assault on the living standards of the working class.
After a fall of 2.2 percent in the first three months of the year, the UK economy plunged by more than a fifth (20.4 percent) in the next three months to the end of June. This is the biggest quarterly decline since records of similar statistics began to be kept in 1955. It is the worst experienced by any of the G7 nations—roughly double the decline suffered by Germany and the United States.
Britain has been especially hard-hit, in part due to the structure of its economy, heavily weighted towards the services sector, which accounts for 80 percent of output. Largely consumer-facing, this sector has been especially affected by social distancing and lockdown measures, and by the caution shown by the population in response to the COVID-19 virus.
Consumer spending was down 27.7 percent in May and was still 14.5 percent lower than a year earlier in June. Visits to retail destinations were down 39.4 percent last month nationally and down 69 percent in central London, which is more heavily dependent on tourists and office workers.
Services fell 19.9 percent last quarter—accounting for three quarters of the fall in total GDP—and recorded a relatively low uptick of 7.7 percent month-on-month in June. Manufacturing fell by 16.9 percent, followed by an 11 percent climb. Construction collapsed by 35 percent but has since jumped 23.5 percent.
Overall, including growth registered across the economy in May (2.4 percent) and June (8.7 percent) as public health measures were recklessly lifted, GDP is now 17.2 percent below its February level. The Bank of England (BoE) forecasts an annual fall for 2020 of 9.5 percent, the deepest drop since 1921 in the aftermath of the First World War, amid the collapse of British imperialism’s commanding world position.
The BoE predicts the recovery of GDP to slow significantly after the initial rebound, with output only reaching pre-pandemic levels at the end of 2021.
Things could be worse still. In May, the BoE forecast a 14 percent collapse in GDP, the worst recession in 300 years. The improved outlook was prompted by the earlier than expected easing of the lockdown and a more rapid pickup in some areas of consumer spending. However, the BoE is warning of “downside risks,” including a resurgence of COVID-19 that is guaranteed by the reckless ending of the lockdown.
The Office for National Statistics (ONS) has highlighted the risks posed by a lasting lag in business investment, down 31.4 percent since the first quarter, as nonessential spending is cut or postponed, especially in consumer-facing industries. Tom Stevenson, investment director at Fidelity International, told the Guardian, “No one knows exactly what the recovery from coronavirus will look like—particularly with the potential for a second wave of infections and further local lockdowns—but it is likely that it will be a slow crawl towards pre-COVID levels.”
The BoE is also worried about unemployment and the impact of job insecurity on spending. UK payrolls dropped 730,000 jobs between March and July, according to the ONS, and vacancies are 45 percent lower than a year earlier. The number of people claiming out-of-work benefits reached 2.7 million in July, double the level before the pandemic.
This situation will worsen dramatically after the government furlough scheme is ended in October. Around five million people were still on the scheme in June, according to the ONS. The Financial Times quotes Gerwyn Davies of the Chartered Institute of Personnel and Development (CIPD) saying, “A real concern is that this is just the first wave of bad news for the jobs market,” and Capital Economics consultancy’s Ruth Gregory warning, “This is just the lull before the storm.”
Research by the CIPD and recruiter Adecco, reported Monday, found a third of employers intended to make redundancies between July and September. The BBC obtained figures showing the number of firms notifying the government in June of their intention to cut 20 or more jobs was five times higher than in the same month last year.
Brexit and the prospect of higher tariffs in Europe paid by British companies are listed as another risk factor.
Even taken together, these warnings and announcements are only a snapshot of a developing crisis of British capitalism, itself only a specific manifestation of a world breakdown centred on the failure of the capitalist system to deal with the COVID-19 pandemic. The virus is out of control across the Americas and in resurgence across the world. Chancellor Rishi Sunak is reportedly considering delaying his autumn Budget until spring in the case of a new series of local lockdowns and a spike in coronavirus cases.
The content of the government’s economic plans, however, is already clear. Sunak told the BBC after the official figures on the recession were announced: “I’ve said before that hard times were ahead, and today’s figures confirm that hard times are here. Hundreds of thousands of people have already lost their jobs and, sadly, in the coming months many more will. But while there are difficult choices to be made ahead, we will get through this and I can assure people that nobody will be left without hope or opportunity.”
Workers have heard all this before. It will be followed by calls to “tighten belts” and “sacrifice” in the national interest. Mass unemployment, on a scale not seen in decades, will be used to enforce vicious cuts to wages and conditions. As in the crash of 2008-9, government debt will be used to justify the evisceration of essential social services.
The working class must reject all such demands. Only they are called on to make sacrifices. Trillions have already been handed to the super-rich globally, on the pretext of confronting a public health and economic catastrophe of capitalism’s own making after years of worsening social inequality, financial parasitism, and assaults on the social conditions of the working class. Now the pandemic rages on, and a further historic collapse in living standards is in preparation.
The money and assets looted by the super-rich must be reclaimed by the working class, and the corporations taken into public ownership, turned towards socially useful production, and placed under democratic control.
In the Labour Party and the trade unions, workers confront a hostile force that has worked hand-in-glove with the Conservative government throughout the pandemic and will continue to do so as the economic crisis deepens. A fightback against them all demands the formation of rank-and-file committees of workers, and the building of the revolutionary party, the Socialist Equality Party, to lead a struggle for socialism.
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Nearly 650,000 jobs lost in UK during pandemic, with much worse to come
[18 July 2020]
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