Economic

Question 1

What were Browns initial priorities in 1997?

Answer 1

• As Labour inherited favourable economic circumstances, Browns priority were to keep inflation low, keep gov. spending under control and show Middle England Labour was pro-business and could be trusted in running the economy.

Question 2

What was Browns tax policy?

Answer 2

• Not to increase existing rates of income tax. Commentators noted it as strictly conservative.
• To fund public spending, so-called stealth taxes (indirect taxing not immediately perceived by voters) were imposed.

Question 3

What was Browns stance on single European currency integration?

Answer 3

• He believed a recession would occur when Britain joined the euro, so he imposed some pretty stringent economic tests that would invariably bar entry from happening.

Question 4

What did Brown do to the Bank of England upon assuming office?

Answer 4

• He made it independent from the government with the power to set interest rates.
• He made the BoE surrender its regulatory powers over the City to a newly formed Financial Services Authority - a neo-liberal policy that advocated deregulation and incentivised capitalism.

Question 5

What was the economic shift post-2001?

Answer 5

• An injection of money was poured into public services - New hospitals, schools, pay rises in the health sector, waiting lists down.

Question 6

Where did a lot of government spending money come from and why was this an issue?

Answer 6

• To avoid tax raises, Brown borrowed a lot to fund public services through the Private Finance Initiative. This proliferated public service improvement but allowed the annual deficit and accumulated debt to rise. This arguably left Britain more vulnerable than it needed to be to the financial crisis in 2008.

Question 7

What is an overview of the economy during Browns tenure?

Answer 7

• Continuous, steady growth .
• Living standards continued to rise while unemployment went down.
• Inflation never got out of control and interest rates remained low.
• The pound strengthened by around 14% by the end of the 10 years.

Question 8

What did Will Hutton argue underlay the ostensible prosperity of the time?

Answer 8

• The consumer boom was based on rising house prices, high credit card spending and personal debt rather than increased productivity.
• There was a danger that this bubble might burst.