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Wednesday, May 04, 2005

UK: the myth of Labour’s economic success

http://www.wsws.org/articles/2005/may2005/econ-m04.shtml

Chris Talbot, 4 May 2005, in WSWS writes about the UK economy.

Some quotes:

"Unemployment has been kept down to a record low of 4.7 percent by utilising the cut in welfare benefit levels brought in by the Tories and forcing workers into low-paid jobs...

"By the time of Labour’s second term... Brown only prevented Britain from going into recession by encouraging consumer spending, causing a huge growth of indebtedness and increasing public spending.

"The surge in house prices, which the International Monetary Fund estimates are now 50 percent overvalued, has, according to the Economist, given 'support to consumer spending at a time when worries about pensions and the falling stock markets might otherwise have pushed up saving.'

"The result of this is that consumer debt has increased to record levels, with total personal debt in the UK now approaching 1 trillion pounds...

"The production side of the economy has seen a continuous decline in British manufacturing, with a loss of 1 million jobs since Labour came to power in 1997...

"Productivity has also failed to improve. According to the Economist, 'In 2003, output per hour worked was 25 percent higher in France, 16 percent higher in America and 8 percent higher in Germany. Labour productivity is lower in Britain because there is less capital invested per worker, businesses are less innovative and workers are less skilled...'

"The true picture is of an economy driven by consumer debt, which faces a collapse in house prices that would send consumer spending into a tailspin and see a corresponding growth in poverty and unemployment."

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