It was, as the Labour duo of Tony Blair and Gordon Brown frequently said, the longest period of economic growth in British history. From the last quarter of 1991 right through to the second quarter of 2008, the economy grew steadily and – apparently - sustainably. It was said to be an end to ‘boom and bust’.
Actually it was Brown’s Conservative predecessor as chancellor, Kenneth Clarke, who first gave a ‘promise of no return to boom and bust’. And it was unbelievable then as well.
Kenneth Clarke, Chancellor of the Exchequer 1993-97, promised 'boom with no bust'
All economies go through phases of expansion and contraction. Some commentators see this as a good thing; as American economist Joseph Schumpeter said: ‘A depression is for capitalism like a good cold douche.’
Much of the post-1991 growth came from a housing bubble, from exporting production to the Far East, and from lack of financial regulation. The economy was vulnerable to shock. And the long period without any correction made the shock even greater when the banking crisis finally came.
More sustainable, in one view at least, was the 1950s model: growth in an average of three in every four quarters. Pressure is released periodically and the risk of overheating is reduced.