Gordon Brown the rather dour heir to the throne of Merry King Tony, is often described in terms which can be paraphrased as “he is a safe pair of hands.” His economic record is then cited to explain this claim. This is an interesting claim as it is a rather simplistic assertion. Brown loves to talk about the low inflation and high steady constant growth and high employment he brought about. That these lovely conditions do exists is impossible to refute. No matter how long I spend with my fingers in my eyes, crying “not true not true,” these facts shall remain facts.
It is from this healthy economy brown has drawn the funds for King Tony’s grandiose projects, the billions extra spent by the government on public sector improvements, and a continuing flow of sufficient funds to them depend on this situation of high employment, low inflation and constant growth. The Blair/Brown project along with those of any government’s is dependent on a strong economy, and as such we must look not at how well has the horse run in the last race but instead the next one.
Here the situation becomes far less obvious and favourable to brown. Under Brown Britain has steady declined in competitiveness. Some interesting facts have winded my way which I thought worth sharing. Though on paper and currently in practice
Since 1997 we have fallen from 4th to 10th in the International competitiveness report.
We have fallen in productivity, in 1992-1997 we had productivity was measured at 2.7 for 2001-2006 it was measured at 1.5.
Brown has failed also to control inflation it is now firmly over 2% the CPI currently stand at 3.1% half the level of 1997.
We have had record trade deficit of 54 billion pounds in 2006, compared to a positive balance of trade in may 1997.
For the first time since records began business investment as a proportion of GDP has fallen to under 10%
For every working day under the current labour government 14 new regulations have been imposed.
Consumer debt has nearly tripled to 1.3 trillion.
Tax has risen 111 times under Brown and now we have the most complex tax code in the world at nearly 10,000 pages.
All in all not nice figures nor encouraging ones when it comes to the future. Ah but some of you will cry remember how bad it was under Thatcher and wheel out statistics about the situation then. This is a crude argument Thatcherism was a product of the breakdown of the post war consensus which was no longer sustainable. In the situation things were bound to be tough and yes with hindsight mistakes were made, but everything is easier with hindsight. The fact remains that her reforms although harsh allow for the strong economy which the Conservatives gifted Brown and the rest of the New Labour team in 1997. An economy which Brown has been busy hollowing out. Impressive on paper Brown’s achievement has only been a relative decline.
3 comments:
Black Wednesday? 3,000,000+ unemployed? 15% interest rates? Negative Equity? Rampant inflation?
Economy safe with Tories?
Black Wednesday would have happened to anyone. The labour party supported ERM. Plus the overall impact is now considered to be less than previously thought,(though still substantial).
The other economic measures you have presented(minus negative equity which is still a threat) are no longer as serious as during those idenitifed highpoints. Most of them infact had been either been or had started to be resolved by Major. The current mild economic situation was caused by the by the reforms of Thatcher, who helped to overcome some of the deeply engrained weaknesses in the economy and let us move on from the bankrupt post-war consensus.
The conservative party was willing to take the hard decisions needed to reform the economy and by the end of Major's government the short term pain had already been firmly replaced by the arrival of the longer term gains.
Admittedly ERM itself wasn't an entirely bad idea, most other now-Euro-zone economies managed to remain in it, on and off, without having such a drastic problem as ourselves. I'd assume mainly because we had such a high valuation and since we were obligated to ensure we remained within the bands until we decided to leave we ended up with the fall in foreign exchange reserves. So it was partly mismanagement, remaining too long in the ERM, and choosing too high a valuation for the pound. That being said the Conservatives did begin inflation targetting, and Brown did managed to cost about £2 billion with the sale of gold reserves, and the fiscal rules were firstly hardly an original idea (though in fairness, it's most certainly beneficial he introduced them), and secondly rely, in their current state, far too much upon his own judgement of the length of an 'economic cycle'. If I remember about 2 of the major segments use that very variable term. Something I think the Conservatives have pledged to rectify.
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