Yet another story about the continuing assault on the living standards of the working class – in these case it’s Italians who continue to be affected.

‘Soaring inflation is causing Italian households to curb spending on food, according to a report by the General Confederation of Italian Industry (Confindustria).

The report showed household spending on groceries is in “sharp decline.” It dropped by 3.7% in 2022, and by 8.7% in the fourth quarter of 2022 when compared with the first quarter of 2021.

“This has become a burden on overall consumption, given that spending on food accounts for 14% of all expenses, second only to spending on housing, water and energy (23%),” Confindustria wrote.

The head of the National Consumer Union (UNC), Massimiliano Dona, described the report as “alarming” and claimed that “Italians are on a forced diet due to skyrocketing inflation.”

He noted that the situation had a serious negative effect on economic growth, considering that “consumption represents 60% of GDP and that, if Italians don’t buy, then merchants don’t sell and businesses do not produce.”

UNC experts earlier noted that the trend of cutting back on food in Italy had emerged during the pandemic. Analysts found that in January 2023, purchases decreased by 4.4% in physical terms compared to one year previously, and by 6.3% compared to the same month of 2021.’

Great to know there’s some good news in the world. German arms manufacturer’s profits up by 27%. There’ll be more German workers being exploited by the capitalist class too. Forty billion euros of ammunition will be sold up to 2031. Get in touch with your stockbroker quickly and get a piece of the pie. Arms manufacturers are saying to undertakers, hold my beer.

How long is the global working class going to let this insanity continue?

‘Dusseldorf-based arms manufacturer Rheinmetall, Germany’s largest defence contractor, has recorded a surge in orders due to the conflict in Ukraine, Die Welt reported on Friday, citing company data.

According to the report, the company received 18% more orders in 2022 than the year prior. It is now planning to significantly increase production.

The report notes that the arms maker intends to launch a new munitions production line at the Rheinmetall plant in Lower Saxony in the near future and hire several hundred additional employees, aiming to increase its output capacity to the level of the 1980s at 600,000 rounds of ammunition per year.

As noted by the news outlet, thousands of people are already working in three shifts at the facility in order to speed up work on current orders. This reportedly includes maintenance and repairs of Marder infantry fighting vehicles, Leopard 2 tanks and Panzerhaubitze 2000 self-propelled artillery units, and ammunition for Ukraine.

Rheinmetall reportedly expects double-digit sales growth in the coming years. The company forecasts that Germany alone will have to buy €40 billion ($43.6 billion) worth of ammunition by 2031. Earlier this week, the German Bundeswehr placed its latest order with Rheinmetall for 367 protected and unprotected logistic vehicles worth around €285 million.

Germany reportedly ranked sixth globally in weapons exports in 2022, with defense contractors enjoying order backlogs and soaring profits amid global rearming due to the conflict in Ukraine. According to estimates, Berlin approved arms exports totaling over €8.35 billion last year, the country’s second-highest figure ever, after an all-time high of €9.35 billion in 2021.

Rheinmetall earlier reported record €6.4 billion earnings for 2022, up by 27% from 2021, along with a record order backlog of €26.6 billion. In the first quarter of 2023, the company’s consolidated sales rose by roughly €97 million, or 7.6% year-on-year, to €1.4 billion. The backlog increased by 8% year-on-year to €28.2 billion.’

https://www.worldsocialism.org/spgb/socialist-standard/2020s/2023/no-1427-july-2023/

 ‘Will the BRI [Belt and Road Initiative] prove to be a platform that offers an alternative to the capitalist world order?…This world will be less Chinese, although the renminbi RMB) will be widely accepted as a reserve currency. ‘

 It’s outrageous”, Sara Parkin, the Green Party spokeswoman was quoted as saying, “that water should become a capitalist commodity”.

‘Britain’s model of privatised utilities is facing its biggest crisis since Margaret Thatcher was selling off the the family silver in the 1980s.

Thames Water, the UK’s latest water company, is in emergency talks with the water regulator Ofwat, ministers and government departments, amid concerns it needs a multibillion cash injection to keep operating.

The water company, which serves 15 million customers, could be put into temporary national ownership by ministers to secure a refinancing package.’

https://www.theguardian.com/business/live/2023/jun/29/uk-privatisation-thames-water-crisis-nationalisation-cost-of-living-economics-business-live

‘The government has “no true grasp on the costs” involved in preventing a collapse of Thame Water, with estimates presented to ministers and regulators suggesting the company could be facing a hole of £10bn in its finances, the Guardian can reveal.

The water company, which serves 15 million customers, is in emergency talks with the water regulator Ofwat, ministers and government departments after the departure of its chief executive and concerns over its ability to continue operating without a multibillion cash injection.

 Measures under discussion include placing Thames into temporary national ownership, in order to secure a refinancing package. That could mean public funds and higher bills for customers may be needed.’

https://www.theguardian.com/business/2023/jun/28/thames-water-in-crisis-talks-over-potential-10bn-black-hole-cost-possible-collapse

‘For decades, water firms, which were handed a monopoly with no debts at privatisation in 1989, have been loading up debt to pay dividends while failing to adequately invest in the infrastructure to fulfil their legal duty: to provide clean water to customers and treat their sewage. ‘

‘Signs of the precarious financial situation that many privatised water companies have put themselves in have been clear for many years, as they loaded up debt to pay dividends. ‘

https://www.theguardian.com/environment/2023/jun/28/mounting-debts-and-public-anger-could-finally-sink-uk-water-companies

The Sun reports, ‘Government plans to temporarily nationalise debt-ridden Thames Water should it collapse ‘

‘One option that emerged from contingency talks is to place it (Thames Water) in special administration, in effect nationalising it briefly…’

https://www.thesun.co.uk/money/22855842/government-plans-temporarily-nationalising-thames-water-collapse/

The call for nationalisation of Thames Water in particular and utilities in general will no doubt reach a crescendo. State ownership isn’t the solution.

The replacement of capitalism by Socialism is.

Let us not forget that clean, sufficient water available on demand is an issue for many millions across the globe.

Privatisation of water utilities isn’t the main problem. The problem is that water fulfils the necessary functions of a commodity and ‘Commodity production is a hall-mark of capitalism.’ The shareholders of Thames Water, and others, are aware that its primary function is to make profits and increase their dividends.

This Blog has posted separately a piece from the Socialist Standard, November 1989 which explains in depth why water is a commodity.

https://www.worldsocialism.org/spgb/socialist-standard/1989/1980s/no-1023-november-1989/why-water-commodity/

The United Kingdom is listed as second richest in Europe with a GDP of 2.7trillion dollars (2020). The UK is the world’s sixth largest economy.

The Tressell Trust was featured in an article in the Socialist Standard, June 2023.

https://www.worldsocialism.org/spgb/socialist-standard/2020s/2023/no-1426-june-2023/material-world-food-another-banking-failure/

The latest report from the Tressell Trust highlights the extent to which food poverty is impacting on very many in the UK.

One in seven people in the UK faced hunger last year due to a lack of money, they say.

The survey said this equated to an estimated 11.3 million people.

About 7% of Britain’s population was provided with charitable food support in the year to mid-2022, while 71% of people facing food shortages said they had not yet accessed any such support.

‘… insufficient income is the fundamental driver for almost all people forced to use a food bank. The vast majority (86%) of people referred to food banks in the Trussell Trust network in mid-2022 have an income so low that they were experiencing destitution when they were supported by the food bank. These already low incomes are further destabilised by a lack of savings and having to cope with arrears and debt.’

Those most impacted are:

‘More than a third (35%) of renters experience food insecurity. This rises to 45% of people living in socially rented housing, with 29% for people in private rented housing. This compares to 6% of people who have a mortgage. One in four (24%) people from an ethnic minority group experience food insecurity, almost twice the rate (13%) for white people. Similarly, more than a quarter of disabled people (26%) experience food insecurity, nearly three times higher than the rate amongst non-disabled people (10%). Nearly a quarter (23%) of unpaid carers experience food insecurity, compared to 12% of non-carers. A fifth (20%) of people living alone experience food insecurity, compared to 13% of people who don’t live alone. 18% of working-age adults experience food insecurity, compared to 3% of people over the age of 65 Nearly a quarter (23%) of households with dependent children experience food insecurity compared to 11% of those without. This rises to nearly half (48%) of single adults living with children.’

In the report’s introduction the Chief Executive of the Trust says:

‘That means we know what needs to change if we’re going to build a more just society where everyone has enough money for the essentials. It is clear that we need a social security system which provides protection and dignity for people to cover the costs of their own essentials, such as food and bills.’

‘Because in coming together, and working together, we will build a future where none of us need a food bank, because none of us will allow it.’

https://www.trusselltrust.org/wp-content/uploads/sites/2/2023/06/2023-Hunger-in-the-UK-report.pdf

As noted in the June Socialist Standard article, we disagree with the first comment the Chief Executive made. Whist a capitalist society continues to receive support from very many including those globally who suffer badly under that system then sticking plaster solutions are not the answer.

We agree with the second sentiment which she expressed; working together we can build a future where none of us will ever need a food bank ever again.

Our solution is one that eradicates the problem once and for all:

‘What is the solution to permanently eradicating food poverty and poverty and inequality completely? It’s what we in the Socialist Party have been putting forward for over a hundred years – the replacement of capitalism with a money-free, wage-free, class-free society where goods are produced for use, not profit. Abolish charity. Abolish capitalism. You owe it to yourselves.’

“Prince William has launched a major five-year campaign to end homelessness, which he says should not exist in a “modern and progressive society“. 

‘European consumer groups have urged shoppers to stop buying products of large pasta manufacturers such as Barilla, De Cecco, and La Molisana in Italy, and Panzani in France, in response to what they claim are unjustified price hikes, according to a Financial Times report.

EU pasta producers are facing growing pressure to cut prices as Italian consumer unions have called for an investigation in to possible price manipulation, saying that the increases in costs have been “inexplicable.”

While manufacturers in Italy and France claim that the price rises reflect the impact of higher production costs sparked by the conflict in Ukraine, consumer groups insist that “reality is far different” from the companies’ narrative.

Food producers have been accused of profiteering and “greedflation” as the surge in pasta prices has been well above broader inflation rates across Europe even despite a sharp drop in the price of the wheat used to make it, the outlet said.

“Year-on-year price hikes measured on a monthly basis are two times the current rate of inflation,” according to Italian consumer group Codacons.

Another Italian consumer association, Assoutenti, has called for a week-long “pasta strike” starting next week, urging people to shun the product and make it at home themselves.

Although Italian inflation has cooled over the past few months, pasta prices were still 14% higher year-on-year last month, according to official statistics.

“For Italian families it’s a fairly existential crisis,” said Clive Black, an analyst at Shore Capital, as they are the world’s biggest pasta eaters, consuming roughly 23 kilograms per year.

In Britain, pasta price inflation reached 27.6% in April, while the figures were 21.8% in Germany and 21.4% in France, data showed.

Meanwhile, Luigi Cristiano Laurenza, general secretary of trade organization Unione Italian Food Pasta, claimed that pasta makers have been hit with higher energy, logistics and packaging costs in light of the Ukraine crisis.

Despite the decline in grain prices, it will take time for consumer prices to go down as producers are still using up the stocks of wheat they bought at peak costs, according to the CEO of La Molisana, Giuseppe Ferro.

Meanwhile in France, the government has threatened pasta producers with financial penalties. Finance Minister Bruno Le Maire said in May that companies will face a tax levy if they refuse to negotiate lower prices.’

There are caveats to this article; ‘may have to’, ‘could wipe out’. However, the general tenor about the effect that the rapidly rising bank rate increase will have on those with mortgages and other borrowers is apposite. Still don’t know what the only solution is?

‘British homeowners may have to pay 50% more on their mortgages by the end of the year as a result of the Bank of England’s (BoE) interest rate hikes, the National Institute of Economic and Social Research (NIESR) warned in a new report published on 22 June.

According to the findings, higher mortgage repayments could wipe out the savings of some 1.2 million British families, bringing the total number of insolvent households to 7.8 million, or 28% of the total in the country.

The analysts also calculated that the rising repayments in aggregate will erase 0.3% of the UK’s gross domestic product (GDP) and cost households with home loans a total of £12 billion ($15.2 billion) per year.

The warning from NIESR follows the BoE’s decision on Thursday to raise its base interest rate by 0.5 percentage points to 5% as the regulator tries to tame the persistently high inflation in the country. While annual consumer price inflation remained unchanged at 8.7% in May, core inflation, which excludes volatile energy, food, alcoholic beverages and tobacco, surged to 7.1%, its highest level since 1992.

“The rise in interest rates to 5% will push millions of households with mortgages towards the brink of insolvency,” Max Mosley from NIESR stated. He explained that many families who took out mortgages with interest rates of 1-2% may be in for a rate surge of 4 percentage points.

“No lender would expect a household to withstand a shock of this magnitude, so the Government shouldn’t either. Some investment should be done in forbearance agreements, giving households and lenders the ability to create payment plans that work for each other,” he said.

Since last year, the average variable-rate home loan in the UK has more than doubled from around 3% to 6.19% as of Thursday morning. This has affected around 4 million UK households that either have variable-rate mortgages or are facing the need to remortgage due to their fixed-rate deals ending.

For a household borrowing £300,000 on a 25-year mortgage, monthly repayments have already been pushed up from £1,400 to £2,000 , a nearly 50% increase, NIESR calculated, warning that with more interest rate hikes expected, these bills will only grow further’.