(Original post by LostAccount)
Perhaps because Labour was already running a needlessly unsustainable deficit prior to 2008, and thus only made matters worse by the time the crisis came? The UK had the largest budget deficit in the G8 in 2004, 2005, 2006 and 2007. If Labour was running the same surplus it inherited in 1997 and didn't turn it into a deficit in 2002, then we wouldn't ever have had austerity. Fact.
Perhaps because Labour blocked Barclays from buying out Lehman, thus potentially stopping the global crash from occurring?
Nothing will make the public trust Labour on finances because frankly I wouldn't trust them with my piggy bank. Just look at their manifesto - no lessons learnt.
Labour were addressing the chronic underfunding of the public sector at the hands of almost 20 years of Tory government. Ever since 1979, public sector spending as a % of GDP had been falling - reaching an all time low of 36% in 1996. Around this time, France, Germany, Italy et al were all spending <50%. UK spending was on a similar level to the USA, who don't even have publicly funded healthcare system, which alone represented ~25% of government spending. Investment in the NHS, education, housebuilding, welfare reforms etc. were all essential and, if you ask most people, were the greatest feat of the New Labou era.
Pre-crash, when was the deficit unsustainable? Major's government ran a greater cash terms budget deficit than New Labour did between the years 1997-2006 (peaked at £51bn in 1992). As a % of GDP, the deficit was much greater during the Major era than it was over the Blair era. Margaret Thatcher ran budget deficits for all but a couple of her 11 years in office.
Labour did not inherit a surplus in 1997. In fact, they inherited a £30bn deficit and transformed it into a surplus which ran up until 2002. Though the deficit did increase between 2004-2007, this wasn't out of the ordinary. France, Germany, Italy, USA, Russia, were ALL running budget deficits of ~3% during those years. I think at the time Spain were the only country doing well.
And your argument that Labour blocked Barclay's from buying Lehman's has been refuted time and time again. The Financial Services Authority demonstrated that no such proposal was ever made, and it definitely would have been illegal had Barclays not consulted shareholders (which would have fallen through at the first vote!).
(Original post by imperium_viribus)
The Labour government inherited a budget surplus in 1997. Government spending as a share of GDP was under 40%. By the year of the financial crisis, that surplus had turned into a considerable (and needless) structural deficit and government spending as a proportion of GDP had hit 45%. Did the marginal improvement in public services justify these extravagent fiscal injections? Not really. The NHS remained as inefficient as it was in ‘97 in terms of patient care outcomes, educational attainment continued its stagnation and on top of that Labour succeeded in creating a generation of workers reliant on tax credits for survival as well as an endemic issue of welfare abuse in inner cities. Well funded budgets are important but chucking money at things don’t inherently make them better. The UK would have been in a much stronger position to weather to global crash had Labour stuck by its 1997 manifesto promise to be fiscally prudent.
See above. Labour did not inherit a surplus in 1997; they whopping budget deficit into a surplus and maintained that for 5 years. Government spending was one of the lowest amongst the developed Western nations - public investment was essential. Government spending as a % of GDP was greater during the tenure of Margaret Thatcher than it was under Blair (when it peaked at 45%).
Last edited by Burridge; 2 weeks ago