Sunday, November 09, 2008

Dragged Under By The Brown Miracle

We have fallen massively behind since 1997

Do you remember how thanks to Brown's economic miracle, our GDP was soaring high above the rest of Christendom?

Yes, you do. Yes, Gordo used to go on about it during his tedious Budget speeches.

And during his tedious Pre-Budget speeches.

And during his tedious CBI speeches.

And during his tedious Party Conference speeches.

And during his tedious Kirkcaldy and Cowdenbeath Trainspotters' Association speeches.

You may have been wondering why he doesn't go on about it any more.

You weren't? Well, I'm going to tell you anyway: it's because - and you'll hardly believe this - the miracle never actually took place!

The truth is that when he took over in 1997 we were growing faster than other advanced economies, and the momentum carried on into 1998. But as soon as Brown's own wealth-destroying policies kicked in, we started falling behind. It was a bit like one of those chickens that carry on running for a while after its head's been cut off, but sooner or later bow to the grisly pressure of events*.

The chart above shows how our cumulative GDP growth since 1997 compares to the average of other advanced economies. The figures are taken from the IMF's most recent World Economic Outlook, and incorporate their updated forecasts for 2009 (see here and here).

As we can see, by the end of Gordo's period in No 11 we were already about 3% behind. By the end of next year the IMF expects us to have slumped even further, with a total cumulative shortfall of c5%.

In money terms, that's around £75bn, or £3,000 per household. Each and every year.

It's a stark measure of how much Brown and Labour have cost us in terms of economic underperformance - £3 grand per year for every single household in the land (and that's before taking any account of the debt mountain they are still accumulating on our behalf).

It also gives us a perspective on those emergency tax cuts. According to the leaks, they will amount to £15bn pa, or £600 per household. Setting aside the risk that the ballooning borrowing will freak the bond markets, £600 ain't that much stcked against a real long-term loss of £3 grand pa.

*Footnote Do headless chickens really carry on running around after the chop? It's something that's bothered me for a long time, ever since I watched my grandfather kill a chicken by whacking it over the head with a bit of lead pipe. You see, that one gave no sign of wanting to run around afterwards. But was that a fair trial? If he'd removed said head instead of whacking it, would the chicken have been more inclined to run? In any event, a headless chicken called Mike supposedly lived for four years by being fed with an eye-dropper through the hole where its head used to be. Although frankly, that doesn't sound any more likely than Brown's economic miracle.

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