ON 13 March, Nigel Lawson will deliver his first budget speech. We will be treated to a mish-mash of tax changes, a reassertion of the Tories' intentions to cut public spending and plenty of rhetoric about their policies recovery. It will be boring and it will do nothing to stop the real deepening crisis of the British economy True, output has been rising in Britain over the past 18 months, but it has been doing so very slowiy hesitatingly. Output whole still two per cent below its level four years ago and manutacturing 13 per cent lower.
More importantly, this output rise is not enough to stop unempioyment increasing, let alone reduce it. Far more needed to do las. I One accepts the government's crazilv optimistic view tha the proposed Nissan factory will create 10,000 new jobs, then to reduce unemployment to two million by 1990 will re. quire the opening of one Nissan factory per week.
Much has also been made of Britain's healthy £2 billion balance payments surplus last year. Closer examination of these tigures reveals the real British economic While oil recorded a CuIsis. £6.9 billion surplus of exover imports manufactured goods were £5 billion in deficit. This is the first time since the Industrial Revolution that brilain nas importea more manufactured goods than it has exported.
This deficit is a result of Britain's long term in. dustrial decline and Thatdefeat the organised by nicals unemployment. producing dynamic However, higher employment means more public spending on unemployment benefits at a time when the . wants lo rcuuce uc amount it borrows.
Once more North Sea oil has come to the rescue by providing huge tax revenues. In short, North Sea oil has financed the Tories' attack on Lne working prevented a major balance of payments crisis.
Ine obvious questiol then, what happens when oil DIOCUCUU! begins to fall in the second half of the 1980's? The answer is disaster :. unless manufacturing can cover sufficiently to fill the gap left by falling oil trade revenues. ass bossble unless manufactured goods Deconle much cheaper countries CADUILS unless there is a big inmanufacturing investment.
Great One of the ways to do the former is to let the exchange rate fall a great deal, but the Tories will not do this as inflation would shoot through the roof.
The other way is to cut costs by increasing productivity and by lowering wages. Increasing productivity long lun comes back to the need for Hore investinent However, capitalists will OLLY invest it they Call make good profits. this is the crunch point for Thatcher and her friends.
For despite all her attempts to boost profits by attacking workers living standards, profitability remains extremely low. the end of last year, the Tale manufacturing investment NO V per cent on average, compared to 16-20 per cent 20 vears ago. For capitalists, makes more sense to put Inelr money in a bank and sit back and earn the interest than to risk putting it in a factory. Time At the same time, Thatcher's hopes that profits would benefit more wages IrON economic recovery are not being fulfilled. Instead of mass unemployment leading to trade unions accepting cuts in real wages, real earnings of those in work have been rising average over the past year.
I natcher s econome policies have reduced inflation, out tney have nol succeeded raising the wages. They have succeedthe accicially decline in manufacturing and in storing up huge problems when North Sea oil begins to run down.
*The Tories have no choice. If they want to solve this economic crisis in the interests of the ruling class then they have to break up the organised workers movement. any Labour/ Alliance coalition which tries solve the crisis bv raising capitalists protits will find itself imDlementing the same kind of Tory policies.
..First1 was a keynesian Then a supply-sider. THE DECISION of the House of Lords last week ..Now I'm.a bum.. Next! was a monetarist..
original High Court deci