Blair’s Economic Legacy Subcontracted to Gordon Brown

The Blair years economically were not really the Blair years at all. Tony Blair, to be honest, is bored by discussions of economic policy. He was more than happy to let Gordon Brown be Chancellor of the Exchequer all this time. Mr. Brown has done a pretty fair job of keeping Britain from screwing itself up on the money front, and the real concern is whether Mr. Brown can find someone to do half the job he did now that he is Prime Minister himself. That said, Tony Blair gets high marks for delegating a job that he would have handled badly himself.

First and foremost, the New Labour crew decided that they weren’t going to turn their backs on Thatcherite capitalism. The only alternative that was politically credible was a return to Old Labour’s solutions, which got the Iron Lady elected in the first place. Their ambition, stolen right out of the Bill Clinton playbook, was to manage capitalism better than the capitalists. That meant independence for the Bank of England, a move that has worked wonders.

Britain’s economy for the last decade has grown at 2.4% per capita. The average for the last 50 years has been 2.1% per capita. That 0.3% doesn’t seem all that impressive, but consider what it means to someone who was making just £20,000 back in 1997. Compound rates of growth do mount up – in this case to about £700 more per year, per person. For a family of four, it amounts to almost £3,000 a year, and the rich did even better.

Meanwhile, inflation in the UK has remained tame, so that extra growth is real, not notional. There has been no sterling crisis (which was a common event in the life of a British PM). The UK has opened itself to the global economy, and in fact, has done this so well that population has grown 4% under Mr. Blair, a rate not achieved in a generation. Britons want to stay in the UK and a great many non-Britons want to come in. Moreover, 2% of national income is invested outside the UK. Back when India was British, the figure might have been higher, but certainly not since.

Above all, Britain stayed out of the euro. There is nothing wrong with a currency union. Indeed, the success of the euro has proved what a good idea a continental currency is. However, Britain’s economy is notoriously counter-cyclical with the economies in Europe. Joining at the wrong time would deny Britain the monetary tools needed to slow or boost economic activity (thereby creating a recession or inflation), putting political pressure on the government at a time when it could ill afford it. In this regard, Tony Blair’s greatest success is achievement by omission – not an easy thing to pull off.

© Copyright 2007 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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