Merryn's Blog

Judge chancellors by results, and Geoffrey Howe was one of the best

If we judge our chancellors by the shape they leave the economy in – as we should – then Geoffrey Howe was among the best.


I interviewed David Smith, economics editor of the Sunday Times last week. I have written up the best bits of our talk in the magazine (out on Friday). One bit that didn't make into the mag was that about Smith's all-time favourite chancellors.

He has a soft spot for Alistair Darling (who did a good job at an awful time, despite having a rubbish relationship with his PM). But top of his list was Geoffrey Howe who also came in at a very difficult time and had a tricky PM to deal with.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

The Tories took over in 1979 and were almost immediately dealing with the second oil shock and with super-high inflation. But into that, Howe did "something quite extraordinary", says Smith. He announced an austerity budget in 1981.

It instantly provoked a letter from 364 economists saying that it was a lousy idea that it would deepen the recession and kill the economy. So pushing ahead with it was very bold indeed as were some of his other policies such as abolishing exchange controls in 1979 (something many thought would lead to instant currency collapse) and cutting the top and basic rates of tax hugely. It worked, says Smith.

Advertisement - Article continues below

Chancellors should be judged by "not just things they have to deal with, but what shape they leave the economy in... and there is no doubt that Howe left it in a much better shape."

The full interview will be out on video at the end of the week.




How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019

Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019

Will Britain close its doors to immigrants post-Brexit?

Details have not yet been forthcoming, but Britain will soon have a new immigration policy. What will that mean for businesses and investors?
8 Feb 2020
House prices

Is the jump in house prices just a Brexit bounce, or is it more durable?

UK house prices rose sharply in January. Some of that is down to the end of Brexit uncertainty – but not all. There is a real risk that prices will ke…
7 Feb 2020

Most Popular

Investment strategy

The secret to avoiding being panicked out of your portfolio

With the coronavirus continuing to occupy headlines, investors still aren’t sure how to react. But the one thing you mustn’t do is panic. Tim Price ex…
11 Feb 2020
Silver and other precious metals

You should all own some silver. Just don’t expect it to make you rich

Silver is cool, beautiful and immensely useful. But for investors it's the most frustrating of metals. Dominic Frisby explains why you should own some…
12 Feb 2020
Investment strategy

Just five assets matter for investors. Here's what they are

Every investor’s needs are different – but most can be met by the right combination of five investments
11 Feb 2020

Why investors shouldn’t overlook Europe

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, tackles investor questions around Europe’s economic outlook and the conseq…
6 Nov 2019