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UK economy a perfect storm

Marxist Analysis · 2026-05-13

Core Argument

The article argues that the British economy in 2018 is entering a structural crisis that cannot be explained away by transient factors like weather or Brexit uncertainty alone. The central claim is that the UK is experiencing a simultaneous stalling of all major engines of growth — consumer spending, business investment, manufacturing, construction, and productivity — creating a "perfect storm" that exposes the underlying fragility of British capitalism. The political paralysis of the May government, caught between a civil war over Brexit and the threat of Corbyn's Labour, means the ruling class is increasingly unable to manage the crisis through normal means. The article warns that when the next deep slump arrives, the only response available to capital will be intensified attacks on the working class.

Theoretical Grounding

The analysis is grounded in the Marxist understanding of capitalist crisis as an inherent feature of the system, not an accident of policy or external shocks. It draws on the classical Marxist distinction between cyclical fluctuations and structural crisis: the article identifies falling productivity — the root of "all genuine, healthy, long-term economic growth" — as the most alarming indicator, which is a direct reference to the Marxist concept that capitalism's dynamism depends on raising the productivity of labour, and that stagnation in this sphere signals deeper systemic problems.

The piece also implicitly deploys the Marxist critique of credit-fuelled consumption as a temporary palliative that postpones but deepens crisis. The observation that the UK economy has been "held up over the past year by credit-fuelled consumer spending" while wages remain stagnant points to the contradiction between production and consumption under capitalism — the working class cannot consume what it produces because the system extracts surplus value from it, and credit merely delays the reckoning.

The article sits within the Trotskyist tradition's insistence that capitalist crisis is not a technical malfunction but a political event that opens the door to either revolutionary or reactionary outcomes. The final paragraph — warning that the ruling class will "renew and intensify their attacks on the working class, further fuelling the political and social backlash" — reflects the Marxist understanding that crisis sharpens class struggle, and that the outcome depends on the balance of forces and the political consciousness of the working class.

Conjunctural Relevance

The article is written in May 2018, at a specific conjuncture defined by several overlapping factors:

  • Brexit paralysis: The Conservative government lacks a parliamentary majority and is consumed by internal conflict over the Irish border and customs union. The article correctly identifies that Brexit uncertainty is holding back business investment, but refuses to treat Brexit as the primary cause — it is an exacerbating factor within a broader crisis.

  • Stagnant growth: Q1 2018 growth of 0.1% is the lowest in five years. Manufacturing PMI is falling, construction output contracted 2.3% in March, mortgage approvals are down 21% year-on-year, and car sales have fallen 16%.

  • Productivity collapse: UK productivity fell by 0.5% in Q1 2018, a figure the article rightly identifies as the most worrying indicator because it undermines all optimistic Treasury forecasts.

  • Credit dependency exhausted: The Bank of England abandons plans to raise interest rates, keeping them at 0.5%, because the consumer credit bubble that propped up growth has reached its limit — households are now spending on debt repayment rather than consumption.

  • Global context: The article situates the UK crisis within the wider global crisis of capitalism, noting Trump's protectionist trade policies as a further threat to world economy stability.

The article's warning that the ruling class will have "few tools left at their disposal to avert recession" is prescient: by 2020, the Bank of England would cut rates to 0.1% and resume quantitative easing, confirming the exhaustion of conventional monetary policy.

Where the Argument Continues

This article is an early warning shot in a series that tracks the UK economy's deterioration through the Brexit years and into the cost-of-living crisis. The argument continues in several directions:

  • Later IDOM articles on the UK economy track the deepening of the productivity puzzle, the rise of inflation, and the Bank of England's increasingly desperate policy responses. The analysis of credit-fuelled consumption as a temporary fix is developed further in articles on household debt and the housing bubble.

  • Against the Stream episodes from 2018-2019 take up the political implications: how the crisis undermines the Tories, what it means for Corbyn's Labour, and the danger that a recession could fuel right-wing populism if the left fails to offer a revolutionary alternative.

  • The theoretical question of productivity — why UK productivity has stagnated for over a decade — is a recurring theme in Marxist economic analysis on the site, connecting to broader debates about the tendency of the rate of profit to fall and the long-term decline of British imperialism.

  • The relationship between Brexit and the crisis is explored in greater depth in articles that argue Brexit is not the cause of Britain's economic problems but a symptom of the crisis of British capitalism and the ruling class's inability to manage its contradictions within the EU.

Connections

  • Marx's Capital, Volume 3: The analysis of credit, fictitious capital, and the way the credit system postpones but intensifies crisis is directly relevant. The article's focus on consumer debt and mortgage approvals as temporary props for growth echoes Marx's discussion of how credit masks overaccumulation.

  • Trotsky's The Death Agony of Capitalism and the Tasks of the Fourth International (1938): The argument that capitalism has exhausted its progressive potential and can only resolve crises through attacking the working class is a direct line from Trotsky's analysis of the epoch of capitalist decline.

  • Ernest Mandel's Late Capitalism: Mandel's analysis of the long waves of capitalist development and the structural crisis of the 1970s provides the theoretical framework for understanding why productivity growth has stalled and why credit bubbles become the dominant form of crisis postponement.

  • Other IDOM articles on the UK economy: "The UK economy: a house of cards" (2017) and "Britain's productivity puzzle" (2019) develop the same themes in greater detail. The series on the Bank of England's policy dilemmas is also directly connected.

  • Against the Stream episodes: Episodes from mid-2018 on the Tory crisis and the economic outlook provide the political commentary that complements the economic analysis.

Key Quotes

  1. "The latest figures for the UK economy are all pointing downwards. Most notably, growth for the first quarter of 2018 was an anaemic 0.1 percent, the lowest for half a decade."

  2. "These figures have important significance for the UK economy, which has been held up over the past year by credit-fuelled consumer spending. With wages stagnant and households forced to spend their money on paying back previously accumulated debts, it is clear that all the engines of economic growth have stalled."

  3. "This is particularly alarming for the capitalist class and their political representatives, as it is productivity that lies at the root of all genuine, healthy, long-term economic growth. Without an increase in productivity, all the optimistic forecasts from Hammond and the Treasury are nothing but pie in the sky."

  4. "In reality, nobody is buying the narrative that snow and blizzards are to blame. Anyone with eyes to see recognises that the UK economy is being battered from side-to-side by the wider forces of the global crisis of capitalism and (closer to home) the prospect of a train-crash Brexit."

  5. "In such a scenario, the ruling class – in Britain and internationally – will have few tools left at their disposal to avert recession. The only option will be for them to renew and intensify their attacks on the working class, further fuelling the political and social backlash that has already begun."