The Prime Minister’s appearances in Parliament last week confirmed two things: First, his belief that low economic growth is a consequence of Brexit and, second, his belief that our economic problems stem from abandonment of the way things were properly done in the 1970’s until the Thatcher government that was elected in 1979, and whose policy legacy has endured until the present.
With respect to the first statement, in almost the same breath the PM also boasted that UK was enjoying the fastest growth amongst the G7 wealthy developed nations. Can both simultaneously be true?
-That we are doing better than the rest of the pack with the fastest economic growth, yet we are saddled with a decade of low growth because of Brexit.
Clearly there is a contradiction, unless he is suggesting that notwithstanding that we are doing better than the pack, we would have been doing even better, romping ahead with Chinese growth rates, had it not been for Brexit.
The reality is that the fastest growth in the G7, which the Labour Government inherited from its Conservative predecessor, is not itself a very high bar. It is better than the pack, but it is nevertheless pretty miserable, just less miserable than the rest are experiencing. That misery has nothing to do with Brexit. It is a consequence of the two great shocks to our economies from which we are still reeling. Namely, the profound long-term impact of the Covid pandemic, and then the chilling effect and dislocation caused by Russia’s war on Ukraine.
That UK is doing marginally better than the rest of the G7, would suggest, on the contrary, that it has proved to be an advantage, rather than a disadvantage.
Now, coming to the 1970’s, to which the Prime Minister would return us, I remember them well:
They were really dreadful. The economy performed intermittently due to strike action. In 1972/3, as a consequence of strikes, we even had a three-day week because there was insufficient electrical generating power for commercial and industrial activity over a full week.
The level of inflation averaged 6.8% and at one time rose as high as 25%.
In 1976 Denis Healey, Chancellor of the Exchequer, had to go cap in hand, to the International Monetary Fund, for a loan to bail out the UK economy. The terms of that loan-imposed swinging cuts in public expenditure: Including the only time, ever in the history of the NHS that its overall budget was reduced, arising as a consequence of that IMF loan.
Andy Burnham was born in 1970, which is why he may have a rose-tinted memory of the decade. Many of us however, remember them rather too well. I’ve no desire to go back to the policies that ensured that we were viewed from overseas as the ‘sick man of Europe’.