by Robert Kirby
In the last few months, the constant refrain from all the mainstream parties has been the need for cuts in the public sector. Lib Dem leader Nick Clegg promised “savage” cuts at his party conference – before rapidly backtracking when his attempt at virility didn’t go down well with the party faithful. David Cameron has promised an “age of austerity”; an entire political era built around government belt tightening. George Osborne has threatened a pay-freeze for all public sector workers. And whilst Labour party figures like Peter Mandelson have complained that the Tories would be “gleeful” in enforcing cutbacks, their “responsible” brand of austerity will mean the same cuts in living standards for ordinary people.
The UK national debt is currently around £800 bn; around 60% of GDP, and is predicted to rise much higher in coming years. The government runs an approximately 12% deficit, meaning that a predicted £175 bn more will go out than come in. Around half of this deficit is structural – meaning that it is a permanent feature rather than a credit-crunch induced blip. This means that the increasing interest on government debt has to be serviced, a cumulative weight on the exchequer that will get worse and worse without action. The deficit could raise interest rates throughout the economy, cause inflation and potentially lead to a devaluation of the currency. From the perspective of the ruling elite, these figures make it seem pretty imperative to restore the economy to balance and competitiveness. But ultimately, capitalism isn’t about balance and competitiveness, but about profit. Continue reading “a beginners’ guide to cuts”