After Thatcher's yuppie boom: here comes the slump!

Labour Briefing no. 66, 6 July 1988, p. 3

Transcribed or corrected by hand from the printed page.

By-line as printed: Phil Hearse (Islington North CLP).

May's £1.2 billion balance of trade deficit – the gap between exports and imports – is a revealing snapshot of the real underlying trends in the British economy.

The economic mini-boom of the last two years, which reduced unemployment (or at least unemployment statistics) by half a million was based on a flood of private credit.

Vast amounts of extra money, based on bank lending, poured into the economy and fuelled a consumer boom among the middle class and the better-off sections of the working class. It fostered the illusion that the British economy had "turned the corner" and helped Thatcher win the 1987 General Election.

Now the price for the boom is becoming clear – a huge influx of imports and sharply rising inflation. The result is bound to be higher interest rates, less borrowing from the banks, less consumer spending, and less investment: in other words – a recession.

Unemployment will start to rise again, the axe will fall yet again on public spending. The Thatcher-Lawson mini-boom of 1987-88, like the "Barber boom" of 1972-73, has been unmasked as a flash in the pan based on easy credit.

Depression

The prospect of a depression in the British economy is reinforced by the gloomy position in all the advanced capitalist countries. Britain is going to be especially badly hit by the aftermath of last October's stockmarket crash.

British capitalism, with a declining industrial base, is heavily dependent on financial services (the City) and foreign trade. But as the world eeonomy slows down, as less financial business is done, British capitalism is bound to fare badly.

Stagnant

The real situation, of stagnant investment, of industrial production barely above 1979 levels, will become increasingly apparent.

The notion that Thatcher – by hammering the unions, through privatisation, through the creation of an "enterprise culture" – has stemmed the crisis of British capitalism – will be exposed as groundless nonsense.

Oppressed

The working class and the oppressed are going to be asked to pay the price for this new crisis. Sections of workers who have seen their living standards rise in recent years are now going to find themselves under severe pressure.

Bankruptcies will increase, and all the Tory fiddling of the figures won't disguise a major rise in unemployment. Attacks on welfare benefits will be redoubled. In other words – an intensification of attacks on all sections of the working class is on the way.

The trend towards slump is a huge challenge to Labour. For two years we have seen Messrs Kinnock and Gould mesmerised by Tory economic "success" and increasingly enchanted by the glorification of capitalism and the market.

Assumption

The underlying assumption was that Thatcherism was working – and making the majority of people more prosperous.

But the truth will become more and more obvious in the autumn and winter months – capitalism in Britain is on the down and down, not the up and up. No amount of "Next" catalogues and "Body Shop" stores can conceal this truth.

Thatcherism isn't working. And only a socialist plan, based on productive investment, common ownership, and workers' control, can solve the crisis in the interests of the working class and the oppressed.

transcribed from the page image, 2 Nov 2026; spelling as printed (eeonomy, in 'world eeonomy slows down';). By-line 'By Phil Hearse / Islington North CLP' in rules below the intro in the first column; the article fills the lower part of page 3 under the section head 'Economy' and is complete there. The opening paragraph and the first paragraph after the by-line are set in bold. Left out: the photo of Docklands flats and its caption, and the unsigned editorial columns above ('Kinnock in Disneyland', 'Throw out the "enemy within"').