Can the sluggish economy really be blamed on Labour?

The latest economic growth numbers may have been fairly unimpressive by most historical standards, but they were rather better than recent readings and surpassed market expectations.

- SEAN O'GRADY

The first estimate of the size of the UK economy showed it had expanded by 0.3 per cent in the second quarter of this year, against a rise of 0.7 per cent in the first three months. Investors had “priced in” a minimal 0.1 per cent rise. The annual increase, ie on the same period last year, is 1.2 per cent. Is this good news or bad news?

What's happening?

The pattern of sluggish economic growth that has prevailed in Britain, and most of the West, since the global financial crisis of 2008, is proving to be the new normal. It's not what we had come to expect. For most of the postwar period, punctuated by stop-go cycles, average economic growth was running at 2 to 2.5 per cent a year, with some endemic inflation and structural unemployment. By the 1990s this had accelerated to something like 2.7 per cent, combined with lower inflation and unemployment.

In recent years, excepting the pandemic, growth has been more like 1 to 2 per cent. This is driven by low investment and a poor productivity record, exacerbated by market loss post-Brexit.

Is this what Labour promised?

No. It gave the impression that the very act of electing a Labour government to replace the incompetent Conservatives would lift confidence and “kickstart” the economy, but no firm evidence of that has emerged. Expectations have not been fulfilled.