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.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Twice daily
MoneyWeek
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Four times a week
Look After My Bills
Sign up to our free money-saving newsletter, filled with the latest news and expert advice to help you find the best tips and deals for managing your bills. Start saving today!
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.
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.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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.
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.
-
MoneyWeek news quiz: Can you get smart meter compensation?Smart meter compensation rules, Premium Bonds winners, and the Bank of England’s latest base rate decision all made the news this week. How closely were you following it?
-
Adventures in Saudi ArabiaTravel The kingdom of Saudi Arabia in the Middle East is rich in undiscovered natural beauty. Get there before everybody else does, says Merryn Somerset Webb
-
Beating inflation takes more luck than skill – but are we about to get lucky?Opinion The US Federal Reserve managed to beat inflation in the 1980s. But much of that was down to pure luck. Thankfully, says Merryn Somerset Webb, the Bank of England may be about to get lucky.
-
Rishi Sunak can’t fix all our problems – so why try?Opinion Rishi Sunak’s Spring Statement is an attempt to plaster over problems the chancellor can’t fix. So should he even bother trying, asks Merryn Somerset Webb?
-
Young people are becoming a scarce resource – we should value them more highlyOpinion In the last two years adults have been bizarrely unkind to children and young people. That doesn’t bode well for the future, says Merryn Somerset Webb.
-
Ask for a pay rise – everyone else isOpinion As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why you should do that too.
-
Why central banks should stick to controlling inflationOpinion The world’s central bankers are stepping out of their traditional roles and becoming much more political. That’s a mistake, says Merryn Somerset Webb.
-
How St Ives became St Tropez as the recovery drives prices sky highOpinion Merryn Somerset Webb finds herself at the epicentre of Britain’s V-shaped recovery as pent-up demand flows straight into Cornwall’s restaurants and beaches.
-
The real problem of Universal Basic Income (UBI)Merryn's Blog April employment numbers showed 75 per cent fewer people in the US returned to employment compared to expectations. Merryn Somerset-Webb explains how excessive government support is causing a shortage of labour.
-
Why an ageing population is not necessarily the disaster many people think it isOpinion We’ve got used to the idea that an ageing population is a bad thing. But that’s not necessarily true, says Merryn Somerset Webb.
