Labour’s fine economic record
I was looking at data on the New Labour governments’ record on the economy, when I came across this excellent presentation, UK Economic Performance since 1997, by Dan Corry, Anna Valero and John Van Reenen, at the LSE Centre for Economic Performance, 15 November 2011 (pdf).
Real GDP per adult grew by 22 per cent between 1997 and 2007 and then fell back by 2010 to 17 per cent higher than it had been in 1997. I was surprised to discover that this record was not as good as the 13 years before 1997: GDP per head rose by about 40 per cent between 1984 and 1997.
Which goes to show the importance of using the right comparators. What was significant about the UK record 1997-2010 is that it was better than that of most comparable economies. The annual growth of real GDP per adult in the UK over that period, 1.2 per cent, was faster than that of Germany, US, France, Japan, and Italy. (See pages 7-11; the graph above is from page 9.) So of course living standards have fallen back: we have had a recession. But so has everyone else. What matters is how we compare with them, which is not badly at all.
Real GDP per head is probably the most solid test of a country’s economic record, but it is also worth noting that it fails to capture the contribution to quality of life of public services. On a measure called Actual Individual Consumption (AIC) per head, which includes “all goods and services that a household consumes regardless of whether they pay for them”, the the UK standard of living is higher than anywhere in the EU apart from Luxembourg.
Unfortunately, I don’t think Eurostat has this data going back to 1997, which I imagine would further flatter Labour’s record because of the huge investment in health and education.
Which ought to put some of the more ridiculous coalition propaganda (and Labour self-flagellation) about leaving the country in a mess into historical perspective.Tagged in: contemporary history, economy, New Labour
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