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Issue #1549      30 May 2012

Britain plunges into even deeper recession

Britain’s big-headed Con-Dem government was told last week to ditch its failed austerity plans after figures revealed the country was in an even deeper double-dip recession than thought.

The Office for National Statistics second estimate of GDP growth in the first quarter of this year showed that the economy shrank by 0.3 percent – down from 0.2 per cent.

Labour, left campaigners and trade unions said the revised figures highlighted the urgent need for a “Plan B” approach – one that focused on economic growth by investing in jobs, manufacturing and the public sector to stimulate the economy.

But the government refused to budge on its cuts agenda and once again blamed the eurozone crisis for all of Britain’s economic ills. Treasury Secretary Danny Alexander said that the economy was suffering a “chilling” effect from the situation in Greece, while his minister Chloe Smith suggested that a way out of the crisis was for the Bank of England to print more money – an approach discredited by many experts.

But Trade Union Congress general secretary Brendan Barber said rather than blaming Europe, the coalition should take responsibility for taking the country’s economy in the “wrong direction.”

“The government needs to face facts and focus on investment in infrastructure and jobs, rather than continue with self-defeating cuts that are holding back businesses, lowering living standards and failing to deal with the deficit.”

Centre-left think tank Compass said its alternative economic strategy put forward in October 2011 was more relevant now than ever.

“All the things we said in the autumn 2011 have come true and our Plan B stands tomorow,” a spokesman told the Morning Star.

The report argued for a Plan B that would reverse the cuts, invest in new green jobs and save hundreds of thousands existing ones to ensure people have money to spend on the high street.

To cut the deficit, the think tank argued £200 billion could be saved at a stroke if the Private Finance Initiative debts were cancelled.

Investment should also be focused on preventing illness and social deprivation and disruption rather than spending billions on symptoms, it added.

Shadow chancellor Ed Balls said: “This is a recession made in Downing Street. Despite all the problems in the euro area, France, Germany and the eurozone as a whole have so far avoided recession and only exports to other countries stopped us going into recession a year ago.”

Communist Party of Britain general secretary Rob Griffiths said: “The only thing constant about official economics statistics from every source is that they have underestimated the scale and duration of the crisis in Britain.

“There is no need to print extra money when the banks have so much already. What is needed is to tax the rich and big business in order to invest in housing and infrastructure.”

Morning Star  

Next article – Solidarity call from Cuban unions

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