"SQUIRMING' Norman Lamont, John Major's charmless Chancellor, has become an easy target for the frustration of increasineiv nervous Tory MP's as time runs out for the calling of the General Election.
Lamont's endless and progressively less convincing claims that an upturn in the economy is just around the corner nave made him a laugh "His search fora way out of the Tock ones current situation, that would give the more naive of the cret orate the illusion that things are improving - or at least that they personally might be better off -before the election has proved fruitless.
The Tories have indeed spent the last 12 years painting themselves into a corner from which they have no obvious escape Global The most stubborn aspect of the economic bind is that the British recession is not an isoglobal recession hitting all the most powerful imperialist economies. The USA, Japan and even the apparently unstop pable Germany have each run into a period of simultaneous slowdown or recession.
In Japan, economic growth this year is expected to halve to just 25%, with some economists predicting outright recession (negative growth) in 1992 for the first time since the 1970s.
Inflated real estate values (which recently the California) are collapsing. putting a squeeze on banks whose assets include property portfolios.
In Germany, orders for nanufactured goods have fal len 4.7%, while the costs and pressures of reunification have aelped push up interest rates This has squeezed all the other European currencies, leaving pound floundering at the se of the EC's In the USA, a gathering economic recession shares parallels with the many problems facing Squirming Norman. There wholesale redundancies plant closures in the manufac sector (most spectacular y in the motor industry, wher General Motors is to sack 74,000 workers and close 21 plants following catastrophic losses of S7 m",.- - loth America): but No. 14 jobs have also been axed in the service sector, notably banking where 100,000 more jobs are predicted to go in 1992.
Estimates suggest that 25 million US workers, 20% of the workforce, were unemployedat some point in 1991.
Depression
Also key in the US crisis is the collapse of property prices, described by the head of the Mortgage Bankers Association as worsethan anything since the Great Depression This has followed on from the disastrous collapse of many US javings and Loan corporation - the equivalent of 30810875 societies; these have had to be bared our by the covernment d a cost last year of $151 billion. reluctant than ever to extend new lines of credit.
Meanwhile the US federal deficit for 1991 is estimated at $362 billion, on top of a cumulative deficit of $3.6 trillion, which brings with it an annual $210 billion in interest payments. The illusory prosperity of Reaganomics has bitten the dust as heavily as Thatcherism in As one senator told Newsweek magazine: 'In the Reagan years we borrowed $1 trillion from foreigners and used it to throw a party:
The problem for John Major's government is that while these conditions prevail internationally, there is little scope to alter the plight of the British есолоту.
The extent of Thatcherism's failure can be measured by a wide range of indicators, the key to which is the decline of manufacturing industry. Manufacturing output is now just 5% above its 1979 level, while engineering output last year fell 15% compared with 1990.
North Sea oil
hope of conomic growth for the finar cial year have been pinned on an expansion of North Sea Oil output, which is now actaly in decline.
At the sharp end is the motor industry, with car sales down 20% in 1991, and commercia! vehicles 30% below 1990 sales. the doldrums, with Jaguar and Rolls Royce losing up to 50% of sales in the USA and facing a slump in dema nd at home. Rolls Royce has closed one plant and acked 1,300 workers: the whole ompany may now be flogged off to BMW.
MANAGEMENT MUST CO.OPERATE...
''AND WE WILL CO-OPERATE.. director of British Acrospace has warned that over 20% of the industry's 194,000 workforce may face the axe in 1992, and the recession has hit deep into basic industry with the the Ravenscraig steel mill.
As in the USA, service sector have inevitably been slashed as part of the slump: it is this unemployment, largely focused in the Tory-voting south east, which vexes the government. Seven out of every ten lost service sector jobs were in the south east, where unlevels have doubled to 7.9% - equal with Many of the record 48,000 firms that went bust in 1991 were also in the south cast, as is the new phenomenon created Thatcherism -epidemic of houses repossessed by building societies result of mortgage arrears.
Tories hit No less than 80% of repossessions -expected to reach 80,000 in 1991 -were concentrated in just 100 TorySmall wonder bet, re remas to parted ests, the measures to stem this embarrassing tide of repossessions, while ignoring the dire poverty faced by millions of tenants, claimants, pensioners, families mortgage and the million their art-time or low-paid workers who can only dream of getting a mortgage.
The Tory objectives wei threefold: to onceal th symptom of their economic ilure; to prop up house price t their inflated level and thu prevent a further lurch into recession; and to do this without spending any new money This was achieved by the deal negotiated with the buildBY WORKING HARDER... BY BOSSING ing societies, under which they will underwrite housing associations buying up and renting out repossessed homes, in exchange for a government pledge to funnel a share of income support payments direct to the building societies ing them at least an extra E350 As a result, dispossessed home-owners could wind up having to pay up to £140 per week to rent back their own homes from housing associations. As the Guanlian summed "* Reviving turnover in the housing market has become the key to economic recovery, for Talling nouse sales and pricer both depress consumer confidence and the myriad of inStill squinning - Lamont dustries that directly serve the market.
Heseltine
Meanwhile Michael Heseltine was doing his best to force up house prices and worsen the by announcing the virtual cessation of council house building. A mere 51,000 houses for rent are to be built by housing associations in 1992: this in turn will deal a death tion industry jobs.
Over 2 million rented houses (1.2 million council properties and 800,000 private rents) have been taken out of the market in the 1980s.
Major and Squirming Norman now lace a hobson s choice of what to do next.
• They cannot reduce interest rates to offer a little relief to those who have over-borrowed, because this would further weaken the pound, and et fectively force a devaluation (or "realignment) against the ERM.
• They cannot cut income tax for fear that this, too, would be seen as weakening the position or stering: i NO CO CUt would take too long to reach the pay packet to make much diference in the Election • They cannot cut VAT, firstly because they only increased it to 17.5% in the last budget, and secondly because they have It below 16%.
• Other suggestions, such as increased mortgage tax relief, a a year inheritance tax, offer too to be worth the financial cost.
of these proposals goes any Wily to addressing the long: term decline of British capitalism in a world market which is static or declis the syatem itself It is which is at the root of the disease, and any effort to treat the symptoms alone will result in failure. Charisma bypass Once more we find that the main asset of Major and Lamont, both of whom face additional problems after undergoing successful charisma by-pass operations, is the weakness of the Labour opposition.
This i why the Tories launched their New Year media onslaught aimed at branding Labour in theeyes of the middle class and skilled workers as the party that wants to jack up Kinnock's master-plan unvelled with a fanfare last week amounted to little more than ofrenus incentives. and en couragements to employers, coupled endless rhetoric on trainingAs the election crunch draws ever-closer, the real danger is Still that voters might prefer to clench their teeth now, and put up with roosson in the taint hopes of a renewed Tory boom, rather than risk the tried and failed remedies of Kinnock's timid package.
John Major's government faces a bleak deepen the already rock bottom level of inthis score. He doesn't want to do anything to