Why we need a debt jubilee

A guest post from Adele Walton, writer and journalist

This weekend, the head of the British Monarchy marked 70 years of reign, where £28 million of taxpayers money was committed to celebrating the 4-day event. At a time when more than 1 in 5 people in the U.K are living in poverty, this Jubilee weekend marks the perfect time to call for a Debt Jubilee.

Debt is now a central part of most of our lives. Just this April, the U.K witnessed a £1.4 billion rise in credit card borrowing, the highest in 17 years, signalling the desperate measures that millions of households are facing. The rising cost of living is squeezing people further into poverty, and many people are left with no other choice but to turn to loans. It seems that our Royal Family is increasingly out of touch from the reality of the ongoing hardships that shape modern Britain. But this is intentional; in the 1970s the Queen successfully lobbied the government to change a law that would conceal her “embarassing” private wealth and exempt her from new transparency measures.

Debt Jubilees are not a new sentiment. They have holy origins, like the trump of jubilee in the Book of Leviticus, which would be blown every 50 years, resulting in debt forgiveness and land being returned to its rightful owners. Similarly, ancient rulers and royal families previously adopted debt jubilees as a temporary way of freeing the working classes from debt bondage. These mechanisms were largely a way of resetting the economy and implementing stability.

But instability has become a central part of the modern global economy, and debt is a key mechanism in this machine. Globalisation and neoliberal hegemony has triggered a series of debt crises, which stunt development and hinder strides towards equality. Structural Adjustment Programmes were prescribed as the solution to the debt crisis being experienced in Latin America and Africa in the 1980s, but these measures have since reinforced global inequality and stifled multiple aspects of development across the Global South. Rolled out by the World Bank and International Monetary Fund, indebted governments were allowed to have their debts rolled over if they agreed to privatise public goods and services, make cuts to public spending and deregulate their markets. But what this temporary debt forgiveness meant was an institutionalisation of austerity that embedded poverty even further.

The legacies of these stringent conditions are ongoing. Research published by Oxfam in May found that 13 of 15 International Monetary Fund loans during the second year of the pandemic required countries to adopt new austerity measures, such as taxes on food and fuel and cuts to public services. Owen Epsley, Senior Economic Justice Campaigner for the War on Want argues that debt cancellation is an integral part of mitigating the effects of global poverty and inequality. “We need international debt cancellation so developing countries can recover from the COVID pandemic and prioritise spending on essential services like education and health, not interest payments to rich country lenders. Billionaires and multinationals have amassed enormous wealth whilst over 50 countries are facing a debt crisis driving up poverty and inequality. Rich country interest rate rises are increasing interest payments leaving countries without funds to tackle the multiple crises of poverty, inequality and global heating.”  Debt cancellation, not debt rollover, is more urgent than ever.

The U.K mirrors this pattern. Rising household debts are being exacerbated by the cost of living  crisis, with UK household debt being at an average of £64,107, and this figure is projected to rise to £85,906 by 2025. In the U.K it has been estimated that more than a quarter of a million people will slide into debt and destitution next year, unless the government acts to address the cost of living crisis. James Meadway, Director of the Progressive Economy Forum argues that debt cancellation is more urgent now than ever for two reasons. “First, that so many people are earning so little there is no realistic prospect of them ever repaying their debts. They have been taking on debt to survive, and are trapped in a situation that isn’t their fault. Second, a jubilee is a form of redistribution: that the obvious injustices of the last decade or longer, where a very few people did exceptionally well but many, many more were forced into debt, could be quickly and easily corrected.”

Debt justice is not simply an abstract economic issue – it determines what areas of development countries can afford to invest in. As Heidi Chow, Executive Director of Debt Justice, explains “Countries in the Global South are being engulfed by unpayable debt while still tackling the pandemic and fighting the climate emergency. Instead of watching resources leave the country as debt repayments often to banks and hedge funds, these countries need significant debt cancellation to urgently release funds to address these multiple crises.”

Despite what the unwritten rules of capitalism tell us, debt cancellation is a possible reality. As we met the millennium year, the Jubilee 2000 campaign witnessed an immense win, securing $130 billion in debt cancellation for 35 of the poorest countries, as a result of their strident international movement. which led to significant improvements in public services like healthcare and education.

At current, international debts are suffocating poor nations and preventing them from being able to invest in public goods and alleviate poverty. Household debts are mounting under the pressure of the cost of living crisis, increasing the financial strain on millions of peoples’ lives. The mental impact of debt cannot be underestimated; in 2017, over 420,000 people in problem debt considered committing suicide.

Movements like Strike Debt and Jubilee 2000 demonstrate that the abolition of debt is not only viable, but deeply necessary. We must learn the lessons of recent decades and call for debt cancellation, if we are to alleviate exploitation and end poverty.

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