23.02.1995

Inflation robbery

ACCORDING to the Financial Times wages in 1993 rose by 1.3%, while inflation rose by 1.5%. Last year the figures were 1.9% and 3% respectively. The Bank of England predicts that underlying inflation will rise to between 2.5% and 3% during 1995. However, this specifically excludes the effect of Vat and interest rate rises, which have a dis-proportionate effect on the middle sections of the working class. The bank is itself recommending further increases in interest rates if unemployment falls.

In the sixties and seventies the organised strength of the working class succeeded in pushing up real wages, even though the employers continually forced up prices in an attempt to negate this. During this period we had effectively negative interest rates, resulting in many workers being able to free themselves of debt. Today interest rates in real terms are extremely high, so substantially reducing our real wages.

Although inflation can result in robbery of the working class on a grand scale, international bankers take a dim view of it (not of course because they are opposed to such robbery). The move towards a common European currency makes financiers and the large transnationals very nervous of currency instability.

NatWest made £1.5 billion profit last year. Directors are to pocket six-figure bonuses worth about 30% of their salary. On the other hand 5,000 counter staff face a pay freeze. Most pay increases will be below the rate of inflation. Another 4,000 jobs are expected to be axed this year.

Tom May