Sunday, 19 April 2015

Did The Conservatives Save The Economy?

Prime Ministr David Cameron launched the Conservative Party poster at an event in Halifax on Friday

The Conservative Party tell you to vote for them because they have saved the economy. They take all credit for the economic recovery, claiming it has happened "because of the measures David Cameron has put in place to back businesses and build a stronger, healthier economy". They claim "our plan is working and securing a brighter future", and that for this reason they are the trustworthy guardians of the economy.

In contrast, they tell us that "Labour have learned nothing from when they were last in power – when they wrecked the economy"and describe the global crash of 2008 as "Labour's Great Recession". (I can't wait to see the look on Obama's face when he realises he spent $700 bn of US taxpayers' money on clearing up a recession entirely caused by the Labour Party of Britain)

The Tories' narrative is very simple. Labour caused the crash. The Conservatives cleared up the mess. The Conservatives saved us from Labour chaos.

This narrative has clearly been accepted by many. In the 7-way election debate, Clegg received a round of applause from the audience for demanding that Miliband apologise for "crashing the economy". In one poll, 46.8% of the public said they "don't trust Labour with the economy". Ispos Mori still find that 37% of voters think Labour would do a worse job with the economy than the Tories.

Is it true? Did Labour ruin the economy? Did the Tories fix it? 

Cameron says that he is the saviour of the economy, the reason we are back on track. So let's be generous to Cameron, because things aren't going brilliantly for him. So let's allow him to forget about every worker and every employer who found a way to make ends meet in the last 5 years, and let's allow him to claim credit the recovery that happened under his government. In fact, let's be extra generous and look at some graphs showing how the country under him!

This graph from the ONS shows the horrendous dip in quarterly growth of UK GDP around the time of the 2008 crash. But then - as we're all expecting - I'm sure it'll show growth starting to increase again as soon as the Conservatives take charge. Oh dear. Maybe not.

If we're being honest, it looks an awful lot like growth is steadily increasing after the crash, while Labour were in power. Then, in mid-2010, our Conservative saviours come to power and the growth rate instantly drops, then looks very wobbly for a while before sinking back into negative figures. And nowhere, at any point under the Conservative government, does the quarterly growth rate quite reach as high as it was when they came to power.

This following bar chart allows us to better see the state of the economy around the crash. There's certainly a nasty period of contract up until halfway through 2009. And then what happens? Labour plunging us further into the depths of misery, I expect. You know what they're like, the stupid idiots.

Oh wait, no. That actually looks quite a lot like steadily increasing growth throughout Labour's last year in power. In fact, if I didn't know better I'd say that every quarter the growth rate increased, until the Tories came to power and the growth suddenly halved, then fell to zero. 

In Labour's final year in power there was a 2% growth in GDP In fact, in Alistair Darling's final three months as Chancellor, GDP grew by a whole 1% - a growth rate not matched in any quarter under Osborne's government. If I was feeling really reckless, I might actually suggest that the decisive crisis-management of the Labour's fiscal stimulus in 2009 allowed the country, even by 2009, to return very swiftly to a tolerable level of growth.

Let's have a look at what happened to growth rates once Saint Osborne had his trusty hands back on the economy, from May 2010 onwards. Everything will be alright now, surely? The only way is up, when you've got the trusty Tories in charge.

Hang on. That's weird. Call me a maniac, but it looks a little bit like growth rates fall off, then return, then fall off again and go into minus figures. But that doesn't sound like "the Conservatives' strong leadership and clear economic plan"? I thought that the Conservatives brought stability to the chaos? They know what they're doing, don't they? I mean, they're all ruddy good chaps, aren't they?

To explore and play around with this data -

The reality is that Labour steered the economy towards recovery: 2% yearly growth in their final year of power. It was only in Osborne's hands that the country was plunged back into recession, from which it has only just recovered. By the second quarter of 2012, the famous "measures David Cameron has put in place to... build a stronger, healthier economy" had successfully ensured the economy was actually shrinking again.

It is the most outrageous myth to claim "Labour ruined the economy; the Tories fixed it". A more honest summary would be "the economy was steadily growing again, until the Tories came to power". The economy stopped growing steadily from May 2010, and reverted back towards recession. Growth became more erratic, and in some quarters the economy shrunk. The Conservatives did not save the economy. The economy did not need saving. And, rather than help, the Conservatives strangled growth and recovery.

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