Economic Analysis – Feb 11 2022 (longer article) 

News out today shows the UK economy grew by 7.5% in 2021. On the surface this is good news; but look deeper and the picture is not so rosy writes local Labour member, and economics graduate, Mark Todd.

The UK suffered the worst drop in economic output of any major economy in 2020. Our economy contracted by 9.4% as our Government repeatedly bungled their Covid response. Due to compounding, 7.5% growth after a 9.4% dip means the UK economy is still 2.6% below the level it was at the beginning of 2020.

This poor performance continues on from a decade of terrible economic performance from the UK under the Conservatives. They may wear sharp suits and look business-like but they have been shocking at managing the economy.

Under Labour from 1997-2010 the economy grew at an average of 2.3% per year. Since the Conservatives took over in May 2010, the UK economy has only grown at 1.2% per year. Despite the Tories being the self proclaimed ‘party of business’, the UK economy has only grown at half the speed.

And, is it any wonder if you look at their policies? Squeezing working people who spend the most while giving tax cuts to the rich who spend the smallest proportion of their income, repeatedly talking down the economy in the early 2010s sapping consumer and business confidence while implementing growth-choking austerity policies, pursuing a hard Brexit, and then spending money wastefully while allowing fraud to run rampant.

Of course, there is the argument that Labour ‘spent all the money’ – Liam Byrne’s note continues to be probably the stupidest joke ever written.

When you look at the facts beyond the silly note, the Blair Brown Government had to cope with the Financial Crisis and Great Recession of 2008-2010 while the Conservatives have had to deal with the Covid Crash of 2021. Both have had difficult circumstances.

From 1997-2010 the Labour Government added £51 billion a year on average to the national debt while the Conservatives have on average added £108 billion a year to the national debt from 2010-22 – more than double

Now the national debt stands at 96% of GDP, when Labour left office in May 2010 it was 74.6% considerably lower.

In fact in May 2010, when Labour left office our national debt to GDP ratio was the lowest of any major developed economy – here’s the list:

UK 74.6%

Germany 82.4%

France 85.3%

USA 90%

Italy 119.2%

Japan 162.3%

I don’t know if you remember how bad UK public services had become in 1997 when Blair won power. Hospitals were crumbling, I remember my grandma dying in the most shocking of conditions, schools were dilapidated, public transport was terrible, and our traditional manufacturing industry was in horrendous decline.

At the 2001 general election, Labour won a second huge majority on the commitment to fix our schools and our NHS by investing in them heavily. The Schools of the Future programme was launched with the ambition to modernise every school in Britain. Education spending rose by 40%. NHS spending was trebled between 1997-2010 to restore the service to a respectable level and make our hospitals nice places to be again (Source: The King’s Fund).

Can you even begin to imagine how underfunded the NHS was in 1997!?

NHS spending has risen much more slowly since.

Labour also created schemes to lift families out of poverty this reduced the number of children in poverty from 3.4 million in 1997 to 2.5 million in 2010. A number that has since sharply increased (Source: IFS staff / The Guardian).

So, Labour did spend money to fix our broken infrastructure. They relentlessly talked up our economy to enable growth to prosper – and achieved double the rate of the 2010-22 Conservatives. Labour did this by running an open economy co-operating with Europe and we all saw the rewards of this.

So, if you ever consider voting Conservative because they’re ‘better with the economy’; think again. Their record is terrible and Labour’s is much better.

Links for Stats:

https://www.bbc.co.uk/news/business-60344573

https://www.theguardian.com/…/labours-effort-cut-child…

https://www.kingsfund.org.uk/…/general…/money-spent-nhs

https://obr.uk/…/Monthly-PSF-commentary-January-2022.pdf

NB. The views Mark and other local members express do not constitute official Labour party policy