Thank you, Mr. Major and co., for our currently strong economy….
By Christopher Awuku - 10th September 2004
At present, the British economy is in a healthy state. Chancellor Gordon Brown is commended as being a 'prudent' Chancellor. Mr. Blair consistently cites 'economic stability' as one of New Labour's finest achievements.
Who created this 'economic stability' though? At the time of writing, yes, GDP growth is steady, inflation is low, unemployment is low and the current account balance is at a manageable level. However, such a state of affairs has been with us for some time.
In 1992 John Major, as head of the Conservative Party won that year's general election, albeit few expected a Tory victory. In April '92 though (the month the election occurred in) the UK was nearing the end of a deep recession. Later that year, the Conservative government was humiliated as a result of the UK exiting the Exchange Rate Mechanism. Interest rates jumped greatly on 'Black Wednesday' and the Tories were about to lose their status as the 'party of economic competence'. However, from this point onwards, John Major's party did display some competent handling of the British economy.
GDP growth
From 1992 to 1997, average GDP growth in the UK was 2.6%, which is above the trend rate of UK growth (that is approximately 2.5%). Average growth under New Labour has been slightly higher at 2.7%, yes, but this simply denotes that Blair and co. inherited an economy that was growing at a steady rate. The statistics used were from
here.Inflation
Since 1992, inflation has been very low in the United Kingdom. This table below denotes that inflation (using the former RPIX measure) has been steady since 1992:
Figures for UK inflation from 1992 can be obtained from
here.Unemployment
Unemployment reached a high of approximately 3 million in 1992, but steadily fell up to and after 1997 as demonstrated below:
Current Account Balance
The UK has possessed a negative current account balance for some time. However, there is little difference between the state of the balance under the 1992-1997 parliament or the Blair government.
To summarise, Britain's economic state was relatively healthy under the last Conservative government. However, this government was grossly unpopular due to sleaze, splits over Europe, the ERM fiasco and a general sense of incompetence. Few seem to recognise that this 'detested' government is responsible for the favourable economic state Britain finds itself in today.