FactCheck: early nineties economy
Updated on 19 November 2008
Gordon Brown claims low interest rates and high employment put the UK in a better position than during the last recession - do the figures add up?
The claim
"What makes our economy in a good position to deal with the problems that we face are first of all, we are able to bring interest rates down - that was not possible in the recession of the early nineties, when interest rates were 15 per cent."
Gordon Brown, Prime Minister's Questions, 19 November 2008
The analysis
Brown has been known to exaggerate the spectre of interest rates past , although this time he gets their peak during the last Tory term right.
Interest rates were 15 per cent - and they stayed there for a year, between October 1989 and October 1990. But after that they did come down, by 4.5 points to 10.5 per cent come September 1991.
On 16 September 1992 - Black Wednesday - rates went up to 12 per cent. The government said they'd rise to 15 per cent, but this was never actually implemented as the UK fell on its ERM sword. A month later, they were down to 8 per cent.
All of which seems pretty high compared to the current 3 per cent, after the Bank of England cut rates by 1.5 points earlier this month. But it's always worth remembering the whopping 15 per cent interest rates didn't last for as long as Brown might seem to imply.
The sources
Bank of England - official bank rate history
The claim
"What makes it also possible for us to be strong is that employment remains high in this country - three million more than in 1997 - something that was not possible in the downturn of the early nineties."
Gordon Brown, Prime Minister's Questions, 19 November 2008
The analysis
The three million more jobs since 1997 is one of Gordon Brown's proudest boasts.
The official statistics bear it out, and the news keeps getting better - or at least, it did. Last week's figures showed 134,000 more people were in employment compared to a year ago. However, this had dropped by 99,000 over the past three months.
This also doesn't take into account a number of job cuts announced since the figures were compiled, including BT, Virgin Media, Yell, Taylor Wimpey and GlaxoSmithKline.
Still, how does this compare with the early nineties? The population of Britain has changed over time, so let's look at the employment rate, rather than simply counting those in work.
In 1990, the employment rate of working age people stood at 74.8 per cent. In recession-hit 1991, it dropped to 72.8 per cent; in 1992 it had fallen again 70.9 per cent. The drop slowed but continued to 1993 - 70.3 per cent, before creeping up to 70.8 per cent in 1994.
The employment rate now - according to the most recent figures available, for the three months to September this year - stands at 74.4 per cent. Which is not exactly a million miles - or even a whole percentage point - away from the proportion at the start of the nineties.
Increasing the number of people in work in line with population increases isn't to be sniffed at, but it's always worth checking Brown's boast against the population as a whole.
Although "74.8 per cent of people in work" may not be such a powerful headline as "three million in new jobs" (or the flipside under the Tories, "three million unemployed"), percentages are arguably the more useful measure to use for historical comparisons, and show a pretty unremarkable difference between the picture now, and then.
The sources
ONS: labour market statistics
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