British economy in 'great danger', trade unions warn

The government’s programme of drastic spending cuts is putting the British economy in “great danger”, the Trades Union Congress has warned ahead of its annual conference opening in Manchester on Monday.

The cuts will affect economic activity, undermine confidence and could lead to higher unemployment which is “stuck” at around two and a half million, with young people particularly badly hit, the TUC’s general council said in a statement.

In next month’s comprehensive spending review the Government will start to withdraw 32 billion pounds from the economy in tax rises and spending cuts from April 2011, on top of the 8.9 billion already taken out during the current financial year, the TUC leaders said.

“There is therefore scant prospect that the private sector will now create the new jobs needed,” they added.

Falling confidence suggests a stagnant labour market and at best a jobless recovery. But the prospect of further deep public spending cuts makes even this look like an optimistic scenario, as both public sector staff and employees in the many companies that depend on the public sector for orders lose their jobs.

Making hundreds of thousands of public servants redundant at a time of such cuts and with reduced redundancy pay when there is little or no chance of finding private sector employment is “callous”, the union organisation said.

The TUC warned that deep cuts to public services, benefits and tax credits are bound to have more impact on those with low incomes, adding: “Women, disabled people and those from black and minority ethnic communities are likely to be among the biggest victims of the cuts and the greater inequality they will bring.

“Unlike cuts, tax increases need not bear down on those least able to afford them, and can reduce inequality across society as a whole.”

The TUC also warned that major redundancies, a public sector pay freeze at a time of rising prices and large-scale reorganisations in many services, particularly the National Health Service, will “seriously damage” morale amongst public sector workers.

Echoing a warning given earlier this week by TUC general secretary Brendan Barber, the general council said: “Real terms pay cuts, privatisation and restructuring, job cuts and threats to pensions all adds up to a volatile cocktail that could give rise to difficult and damaging disputes, and the TUC stands ready to support and co-ordinate union action where members decide that industrial action is necessary to defend services and those who deliver them.”

Next week’s conference will hear calls for co-ordinated strikes to defend public services and jobs.