Despite dire forecasts for the economy and living standards, the Tories are continuing with more austerity. It can’t go on argues Lindsey German

So now we know. When George Osborne was telling us that he was fixing the roof when the sun was shining, he was doing nothing of the sort. Instead, we are suddenly told that the economy is in worse shape than anyone thought, that his forecasts for economic growth and earnings were completely wrong. The supposed successful outcomes of dealing with debt, raising wages, and expanding the economy just haven’t happened – and aren’t going to happen. According to the Institute for Fiscal Studies analysis of the budget its pretty much all doom and gloom. Its director, Paul Johnson says ‘We will all have to get used to the idea that steadily rising living standards may be a thing of the increasingly distant past.’

Johnson describes the fact that wages in 2022 might still be below their 2008 levels as ‘truly astonishing’. He’s right – and also truly astonishing is the lack of complaint about a chancellor, civil servants and the Office for Budget Responsibility which all got the forecasts so badly wrong. In every case, they overestimated growth in economy and earnings and underestimated debt and borrowing. In any half decent political culture, this would be a matter of political and maybe legal concern, as well as huge anger. Instead, there seems to be a state of paralysis and almost acceptance of the obvious decline and feebleness of British capitalism. 

We should instead be raging about this state of affairs. Working people are being offered a life sentence of worsening personal and public wealth, of lower wages and cuts in living standards, of declining levels of health and social care, of two-tier education, of the worst housing crisis for 70 years, of closures of public amenities, of insecure and precarious jobs lacking skills and investment. This will be against a background of growing inequality and a culture of impunity for those companies and individuals which refuse to contribute a fair share to paying for the public good, but squeal at any suggestion that they should do anything but become ever richer. 

This situation cannot hold. It is unsustainable to believe that levels of inequality can continue to grow in this way. But it is going to take a huge change in politics and organisation to make a fundamental shift in society and to bring about economic redistribution. Those who run British society seem oblivious to much of this. Yet the signs of discontent have been there for anyone to see.  The election of Jeremy Corbyn as Labour leader in 2015 and his performance in the general election in June are both indications of a growing public rejection of the policies of austerity, greed and inequality. In different ways, the Brexit vote also signalled widespread unhappiness with the status quo. 

The parlous state of the Tories is the other side of this coin. It is in the interests of both politicians and the media to portray this as all about Brexit. But the arguments before, during and after the referendum have always been about much more than the immediate question. It was also about what sort of society Britain should be. For its ruling class, this was about whether it remained within the major trading and industrial bloc of the EU, which the vast majority continued to believe should be the case; for voters, the no vote was for some a conscious harking back to what they saw as better days, while for others it was a much more inchoate rejection of the status quo, embodied in this instance in the distant, neoliberal institution of the EU. 

The economic difficulties now being spelt out likewise predate Brexit and would have taken some of the same form if the referendum outcome had been different. None of the problems will be solved either by taking Britain out of the EU or leaving it in. What the budget and its aftermath reveal should act as a reality check about the long-term decline of British capitalism, a decline which a highly inflated property market and the success of the City of London cannot conceal forever. The Guardian’s Larry Elliott compared this sudden awareness of decline as comparable to Suez in 1956, the moment when Britain realised that it had lost its empire and was subordinate to the US in relation to foreign policy. That might be exaggeration, but there is some truth in it. 

What does it mean for Labour? Well, certainly not that things can only get better. If things are indeed going to get worse, then the big questions are who makes the sacrifices, and how does this get turned around? These are questions to which the champions of neoliberalism have no answers except more of the same. Jeremy Corbyn does have answers to these questions. The rich should make the sacrifices, and there need to be very high levels of public investment in jobs and services as well as education. However, these are views bitterly opposed by a venal ruling class and feared by sections of his own party. There are already many calls for compromise and moderation.

But what should be clear to all of us is that these substantial changes alone, leaving aside more radical changes to the system, will take a combination of political will, mass working class organisation, and a challenging of the rich and powerful, to come anywhere close to being achieved. We are far beyond the territory of politics as usual. 

Europe isn’t working and it can only be changed from below 

It isn’t actually going that well in most other parts of Europe either. Most notably in the last week, Germany’s political crisis entered a new phase with the failure of talks around the Jamaica coalition, the perhaps fatal weakening of Angela Merkel, and talk of a new election. This is particularly unusual in postwar Germany, whose political system is based on ensuring compromise and stability. But here too the centre isn’t holding, with big votes for the far right AfD and to a lesser extent for the left Die Linke in Septembers election.

At root, here is again growing discontent with austerity policies and a rejection of the centre parties who support them. The growth of far right parties in response to this is a major concern for us all, but the antidote to it is in our own hands. The left has to be relevant to those concerned about the crisis, has to put forward demands and ideas which can lead to alternative policies not based on racism and scapegoating, and has to show in practice that working people through fighting alongside one another can begin to take control of their lives. 

Jeremy Corbyn has been an inspiration to many on the left across the continent. Constant debate about Brexit cannot be allowed to dominate the left agenda when we should be pointing out how we can unite with German, Italian, Polish and other European working people to destroy the policies which are destroying so many lives. 

Their true colours 

I have had many enjoyable discussions about the BBC documentary which followed several Labour MPs during the last election. Labour – the summer that changed everything was great television, especially its filming of the MPs as they watched the exit poll on television showing a hung parliament. Stephen Kinnock looked as though he had swallowed something particularly unpleasant. Lucy Powell looked dazed and bewildered and Ruth Cadbury revealed herself as not very nice. 

A few things struck me about the film. The first was the certainty and sense of entitlement of these MPs, even though it was clear that despite spending five weeks canvassing the result hit them as if they had just returned from filming I’m a Celebrity Get Me Out of Here in the Australian jungle. Related to this was the fact that they never seemed to argue with people who said they didn’t like Jeremy Corbyn but just moved on. When enthusiastic canvassers from outside their areas did put the case for supporting Corbyn, they were well received, but were argued against by those closest to the MPs, who had all convinced themselves it was going to be a disaster for Jeremy. 

Indeed the appearance of these enthusiastic volunteers was another major surprise for them, as was the increased turnout and Labour majorities in their constituencies. Kinnock maintained his view that this would be a bad day for Labour and that Corbyn would have to resign. Overall, the impression of the MPs was of political malice and stupidity, which seemed to be in fairly good supply.

There’s another question though, which the BBC ought to answer. It obviously chose these MPs and this approach because its own narrative was that Corbyn was a disaster who would cost votes. Maybe Kinnock would even emerge as a possible successor as leader (in his dreams). So the documentary that it made was the opposite of the one intended. It would perhaps have been good o acknowledge this. And to answer the question of whether it is legitimate for a state-funded broadcaster to join in the chorus against a twice-elected leader which was amplified around parliament but was confounded by reality?

• Sign up here to get this weekly briefing in your inbox every Monday