a beginners’ guide to cuts

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.

cameronpigs

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”

formula 1 millionaires seek state bailout

by David Broder

The Honda Formula 1 team may be set to receive a bailout from Lord Mandelson’s £2.3 billion fund for the car industry in a further example of state intervention to shore up the super-rich.

The team is currently owned by Honda, the world’s sixth-largest car manufacturer. Although the marque’s sales have suffered much less from the recession than its rival Toyota, in November it announced plans to sell off its Formula 1 team, which finished 9th out of 10  in the 2008 constructors’ championship on a budget of £180 million.  A 63% fall in Honda’s quarterly profits has also prompted the shutting-down of its Swindon road car factory.

Honda claim that closing the team entirely would cost it more than keeping it going, but wants to wash its hands of the operation. Therefore any state bailout would essentially amount to using taxpayers’ money to save an unprofitable part of Honda’s business which it wants to junk. Continue reading “formula 1 millionaires seek state bailout”