Labour's growth story is impressive, but there's more to it

There's a longer period of economic growth...


This claim was first made by the Chancellor in his 17 March 2004 budget speech, and has been repeated often since. In the 2005 budget speech, he extended the scope of the claim even further - back to 1701.

It was included in the series of posters unveiled at Old Billingsgate fish market, east London, in January this year, accompanied by actors in Georgian costumes to remind voters how people dressed the last time we supposedly had it this good.

Annual or quarterly?

However, whether this claim stacks up depends on which set of figures you use - annual statistics for national income (Gross Domestic Product), or quarterly measures. Both sets of figures show a period of uninterrupted growth from 1992.

According to the quarterly figures, this is indeed the longest growth spurt for a very long time - in fact since as far back as 1955, when quarterly records began.

However, the annual figures suggest that the actors should have been wearing platforms and flares. They show an uninterrupted period of growth from 1948 to 1973 - much longer than the period from 1992.

The quarterly figures for the same period, from the aftermath of the Second World War to the Seventies oil crisis, show a general upward trend, interrupted by the occasional quarter or two of negative growth.

So which are the most appropriate?

Both Gordon Brown's speech and the poster refer to the threat of recession. Since a recession is usually defined as two successive quarters of declining GDP, then the quarterly figures are relevant to addressing this question.

On the other hand, it seems inconsistent to rely on quarterly figures from 1955 onwards and annual figures before then.

Also, the fact that there have been no quarters of negative growth in the past twelve years may not just be a result of government policy.

According to Nick Crafts, professor of economic history at the London School of Economics, the relative smoothness of recent quarterly growth figures is more to do with the international financial climate than better governance.

No stop-go

Governments can now borrow money much more easily than they could before, he says, and hence they are able to run a substantial budget deficit.

This means they can plan their fiscal policy to produce sustained economic growth, rather than focusing on balancing the Government's books.

"The reason you had stop-go policies during this period is it was one where you couldn't run much of a deficit on current account," says Professor Crafts.

"Fiscal policy had to be designed to bring national savings and national spending into line."

Of course, the Conservatives were in power for more than a third of the period between 1992 and now. Much of the success of the current Government in keeping the economy growing consistently is down to Tory reforms following Britain's expulsion from the Exchange Rate Mechanism in 1992.

Some stabilising measures, such as giving independence to the Bank of England in 1997, are Labour's own achievements, but they cannot claim exclusive credit for this recent period of growth.

Sources
Hansard, 17 March 2004
Hansard, 16 March 2005
Office of National Statistics

Channel 4 is not responsible for the content of external websites.