When Boris Johnson recently promised to “make a titanic success” of Brexit, it is unlikely that he realised at the time just how apt his choice of words was. With the Philip Hammond, the Tory Chancellor, yesterday predicting slower growth and a £122bn hole in the government’s finances as a result of Britain’s forthcoming departure from the EU, it is clear that the UK economy is heading for an iceberg.
When Boris Johnson, the pro-Leave Tory foreign secretary, recently promised to “make a titanic success” of Brexit, it is unlikely that he realised at the time just how apt his choice of words was. With the Office of Budgetary Responsibility (OBR), as part of yesterday’s Autumn Statement, predicting slower growth and a £122bn hole in the government’s finances as a result of Britain’s forthcoming departure from the EU, it is clear that the UK economy is heading for an iceberg.
Philip Hammond, meanwhile, issuing the Autumn Statement for the first time in his new role as Chancellor, was like a desperate man rearranging the deck chairs on the Titanic. At the end of the day, all of the promises – to raise the National Living Wage (from £7.20 to a still meagre £7.50), build 40,000 extra affordable homes, and spend £23bn on innovation and infrastructure in order to raise productivity – were lost amidst the headline figures and forecasts: years of further austerity; around £100bn in additional required government borrowing; and a cumulative reduction in potential growth of 2.4 percentage points as a result of Brexit.
With the world economy already in a precarious state and further political shocks on the horizon, the measures stated by the Tory Chancellor regarding tax changes and government investment seemed trivial in comparison to the enormous danger staring the captains of British capitalism in the face.
Calm before the storm
The serious bourgeois papers praised Hammond for his low-key, understated performance, relieved by the absence of any major announcements in these times of extreme turbulence, volatility, and uncertainty. “Philip Hammond takes a sober approach to post-Brexit Britain”, the Financial Times, a reliable mouthpiece of the capitalist class, declared. “Given the turbulence that lies ahead,” the FT states, “a chancellor who exhibits unflashy competence, and appeals to sense over emotion, is what the country needs.”
“A post-Brexit Autumn Statement that prepared the country for tough times ahead: sparse, serious, austere”; “An unvarnished reckoning with the damage to growth and the public finances that Brexit might cause.” These are how the strategists of capital assessed Hammond’s speech.
“Mr Hammond has not set the Thames on fire,” Martin Wolf goes on to write in the FT, “But that is the last thing the country needs. He has got rid of his predecessor’s foolish fiscal targets and replaced them with more realistic ones. He has promised spending that might even help the economy. He has taken a bet on the markets’ acceptance of higher deficits and debt. He has, above all, had to accept the OBR’s view that Brexit will prove costly. We must hope this proves to be untrue. But hope is not a policy. Mr Hammond seems at least a man able to cope with the grimmer prospects ahead.”
These words of the Financial Times express the sentiments of the bosses and bankers, who are pleased to see a level-headed representative of big business at the helm in these stormy times. Such reassurance is clearly much appreciated by the City of London amidst the political chaos that has erupted in Westminster in the wake of the Brexit vote.
Hammond’s speech, in turn, follows on from Prime Minister May’s equally calming words to the CBI (the Confederation of British Industry), the bosses’ union, that the Tories would stand up for big business. After months of party in-fighting and grandiose rhetoric about tackling corporate corruption, the new Tory leadership are now attempting to send out a clear and unequivocal message to the capitalists: May and Hammond will be reliable statesmen and trusted defenders of the interests of the 1%.
Sober amongst drunkards
The whole tone of Hammond’s statement was meant to provide a sombre yet serious assessment of the risks facing British capitalism that lie ahead, particularly in the wake of Brexit. “There’s uncertainty around the future course of policy in the US, uncertainty about global trade, uncertainty about the growth rate of the Chinese economy,” the Tory Chancellor asserted, outlining the dangers ahead for the world economy, in defence of the OBR’s forecasts.
Unfortunately for the Chancellor and his supportive Prime Minister, their Eurosceptic colleagues in the backbenches did not share in the praise offered to the Autumn Statement by the bourgeois press. Iain Duncan Smith, the former Work and Pensions Secretary and prominent Leave campaigner, described the OBR’s economic predictions as “yet another utter doom and gloom scenario”, stating that, “the key thing is that the OBR has been wrong in every single forecast they have made so far…On the deficit, on growth, on jobs, they have pretty much been wrong on everything.”
Pro-Brexit Tory MP John Redwood, meanwhile, defiantly proclaimed that, "Their [GDP growth] forecast probably is too low, their borrowing forecast is far too high, and we'll get good access to the single market once we're out of the EU."
“Suspicion of experts goes back into antiquity,” Jacob Rees-Mogg, an infamously arch-Eurosceptic Tory MP, declared, justifying the scepticism towards these Cassandras and their pessimistic prophesies. “Experts, soothsayers, astrologers are all in much the same category.”
From the perspective of the ruling class, then, Hammond and May are the only sober-headed people at (or, rather, in) a party of drunkards. Whilst all the serious capitalists and their representatives are screaming about the impending cliff of Hard Brexit that the country is about to drive off of, the Brexiteers are screaming at their leaders to ignore the warning signs, put their foot on the gas, and accelerate into the abyss.
The dead end of capitalism
With frenzied Tory backbenchers on one side, the interference of the High Court on the other, and a set of damning forecasts from the OBR on their desks, May and Hammond’s calm in the face of adversity may have temporarily settled the nerves of big business. But the fact remains that the world economy is teetering on the brink, and no amount of stoicism from the government’s chief politicians will improve the prognosis for the dying patient of British capitalism.
Indeed, the political uncertainty arising from the earthquakes of Brexit and the Trump presidential victory has had a clear impact on the UK economy, with private investment stalling, growth slowing, and inflation rising. As we have reported elsewhere, even before the latest OBR figures, all the signs were already pointing towards another slump – not just in Britain, but internationally. And this is not to mention the prospect of the whole European project being torn to pieces in the coming period, with the rise of anti-EU parties in France and Italy potentially providing the final nail in the coffin for the single currency and the common market.
It is clear, then, that Hammond, May, and the Tories have nothing to offer the working class – neither with this latest Autumn Statement, nor with their wider programme of austerity and attacks. Whether it is a “soft” or “hard” Brexit on the cards will make little difference for workers and youth, who have already experienced years of failed Tory policies under Cameron and Osborne. And with years of further callous cuts in store, it is evident that the Tories – and the senile capitalist system they defend – are a dead end for vast majority of ordinary people.
The time is ripe for the Corbyn-led Labour Party to go on the offensive. Unfortunately, however, the response from John McDonnell, the shadow chancellor, to Hammond’s announcements did not match the boldness demanded by the situation, with reporters stating that, “even the most loyal Corbynite MPs sat glumly, many fiddling with their phones as he [McDonnell] spoke”. Corbyn, meanwhile, could also be found at the CBI conference earlier this week, like May, reassuring Britain’s bosses that Labour would work with big business – at a time when big business and its Blairite representatives in the Parliamentary Labour Party (PLP) have made it abundantly clear that are not willing to work with him.
What is required is for Corbyn and McDonnell to provide a militant lead in the charge against the Tories and the capitalist class interests that they defend. This must begin by cleaning out the stables of the Labour Party, sweeping away the Blairite backstabbers in the PLP and replacing them with genuine fighters of the working class. United behind Corbyn, and armed with a bold alternative to Tory austerity of socialist policies, the unstoppable power of the labour movement could quickly bring the Tory government to its knees. There is no time to waste.