The Governor of the Bank of England, Mervyn King, has spoken publicly for the first time since the run on Northern Rock, outlining the problems facing the UK economy from the perspective of the ruling class.
The Bank of England has warned of a number of risks to the UK economy next year, in comments that analysts have said point to lower interest rates.
In its quarterly Inflation Report, the Bank forecast the economy would slow in 2008 and inflation would accelerate.
The worry felt by millions of people – workers, students, pensioners, and small businesspeople – appears to be spreading to the elite – though the concerns are radically different, of course. For the ruling class, there is concern about the future, for workers, the concern is about the present.
Prices are rising as growth forecasts are being cut but the markets have yet to be fully “corrected” and this worries the Guvnor. The longer it takes, the worse it’s going to be – a sharp fall in share prices could mark the start of a downward spiral in which rash decisions on war could be taken by the world powers.
It’s not looking good:
HUGE petrol and food price increases have pushed up the UK cost of living, cutting workers’ wages and living standards.
The Office of National Statistics confirmed yesterday that the costs of food factories had risen by 6 per cent in the last year.
It is now estimated that this increase, the highest annual rate since 1993, will lead to food costs increasing by £1,000 per annum for the average working class family.
In the face of this onslaught the UK official inflation rate rise to 2.1 per cent in October, breaching the government’s 2 per cent target, was taken as a complete understatement of the real inflation rate.
This figure was up from September’s rate of 1.8 per cent, while the official RPI inflation measure, which counts mortgage interest payments, rose to 4.2 per cent in October, from 3.9 per cent.
Bad enough as it is, this figure is also being taken as a complete understatement.
In the real world, petrol pump prices rose by 2.7 pence per litre in October, reflecting the increase in fuel duty that came into effect on the first of the month, the ONS (Office of National Statistics) said.
Oil prices remain close to record highs near $100 a barrel, and the average price of petrol rose above £1 per litre last week.
Massive hikes in the prices of meat, fruit, breads and cereals also led to an increase in food costs, the ONS said.
On Monday, data showed that rising petrol, chemicals and food prices had sent factory gate inflation to the highest rate for nearly 12 years.
Meanwhile, an emergency meeting of the Road Haulage Association yesterday signalled that the UK is on the brink of huge fuel price protests as thousands of hauliers go bust.
The days of cheap credit and low-cost imports are ending. The British ruling class won’t be able to put off confrontation with workers, but a the same time any direct fights could further entrench the Disunited Kingdom, as the nationalist parties offer social democratic reforms to win support for independence, and also further jeopardise Labour’s link to the trade unions, without which free and independent trade unionism would flourish.
We are certainly entering a period of grave economic crisis in the UK…