Why Labour haven’t dispelled the myth about the deficit? Watch

Burridge
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I find it truly baffling that the Labour Party haven’t cleared up the misconceptions about the cause of the country’s finances in 2008. Global GDP contracted by 1.8% in 2008 - this was a worldwide issue, not a local one. This is a telling statistic - yet I’ve not heard anyone in the Labour movement recite it.

I believe it to be the primary reason why the electorate don’t trust Labour with the economy - it plays right into the hands of the Tories. The party has made a profound transition to the left since Brown left office, I wonder if it’s intra-party tribalism that has meant nobody in the mainstream Labour movement wants to make any association with New Labour?
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LostAccount
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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.
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paul514
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(Original post by Burridge)
I find it truly baffling that the Labour Party haven’t cleared up the misconceptions about the cause of the country’s finances in 2008. Global GDP contracted by 1.8% in 2008 - this was a worldwide issue, not a local one. This is a telling statistic - yet I’ve not heard anyone in the Labour movement recite it.

I believe it to be the primary reason why the electorate don’t trust Labour with the economy - it plays right into the hands of the Tories. The party has made a profound transition to the left since Brown left office, I wonder if it’s intra-party tribalism that has meant nobody in the mainstream Labour movement wants to make any association with New Labour?
Because very simply they had run a deficit for years and signed the government up to loads of PFI deals then to top it all off they had loosened the regulation of the financial sector so we were one of the most at risk in the world when it happened.

Yes the conservatives back the loosening of the regulations but they weren’t the ones over over saw it.

That’s the reasons and the stupid hypocrites have been telling us ever since that borrowing one pound in four was fine in-fact we should borrow more to get out of it.
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fallen_acorns
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Partly its due to policians knowing they can stretch the truth and people won't realise.

you get it from both sides:

labour politicians confuse deficit and debt all the time. Its not because they are that stupid (mostly) but because they know that if they say:
'LOOK the torries promised to remove the deficit, but the DEBT has dobuled/trebbled etc.'
quite a number of the population won't notice their slight of hand, and will just think 'YEAH those torries are lying! / hypocritical'

conservative politicans blame the deficit on labour all the time, and its not because they are stupid (mostly) but because they know that if they say:
'Labour got us into this mess, they caused these problems'
quite a number of the population won't notice their slight of hand, and will just think 'YEAH those liberals are lying / hypocritical'

---

In reality though, all sensible/reasonably informed people know it was a global crash - no one denies that.

The reason many still lay a lot of blame at labour labours feet for the deficit, is because of their management of the crash. Not that they caused the crash - but had they managed the nations finances better, leading up to the crash, and through the crash, we could have been better off.

Its undeniable in hindsight that labour did not do the best job with the countries finances through the good times, or the bad.

Labour also sealed their fate and repuation by doing 2 things:

1, brown announcing the end of boom and bust - before leading the country to one of our biggest booms and biggest busts
2, the day they left office, leaving a note saying there was no money left
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imperium_viribus
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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.
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paul514
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(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.
Don’t forget all the PFI that was off the books of that 45%
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Burridge
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(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!).

Some links:
https://www.ukpublicspending.co.uk/s...Budget_Deficit
https://www.bbc.co.uk/news/business-13366011
https://www.reuters.com/article/barc...62B25820100312

(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%).
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Burridge
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It's certainly not a popular statement, but the Blair/Brown era was marked by considerable economic success considering the Tory devastation that had preceded it. Before the global financial crash hit, unemployment rates were averaging 5%, inflation was stable, & growth was consistent (in fact, without a contraction in the economy until 2008). Poverty numbers fell, as did the number of workless households.

That's not to say Labour handled the economy without fault because they certainly didn't; the proliferation of PFIs as a well as further deregulation of the financial sector, to name a couple. But to assert that the New Labour era was an economic failure is an affront to the facts.
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DSutch
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The Labour Party have never been trusted with the economy. Even though the only budget surpluses since the war bar one year were under Labour governments, and Gideon Osborne's supposed five years to end the deficit will be twelve at least, or more if Brexit ends with no-deal.
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Davij038
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(Original post by Burridge)
It's certainly not a popular statement, but the Blair/Brown era was marked by considerable economic success considering the Tory devastation that had preceded it. Before the global financial crash hit, unemployment rates were averaging 5%, inflation was stable, & growth was consistent (in fact, without a contraction in the economy until 2008). Poverty numbers fell, as did the number of workless households.

That's not to say Labour handled the economy without fault because they certainly didn't; the proliferation of PFIs as a well as further deregulation of the financial sector, to name a couple. But to assert that the New Labour era was an economic failure is an affront to the facts.
Didn’t Brown go to pains to copy Ken Clarke’s spending plans?
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paul514
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(Original post by Burridge)
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%).
Don’t forget how fast the economy grew in that time period
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RobinKent
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Unfortunately we don't choose MPs based on onbective criteria such as business experience so we end up being run largely by lawyers and political activists who have never had a real job.

The balance of our post 1945 history suggests the Conservatives suffer less from this than Labour in most economic scenarios.

Labour inherited a good economy in 1997 actually promising no change initially to calm voter fears! Over the following decade it went further into debt and put nothing aside for a rainy day.
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