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Macroeconomic Policy in the UK under New Labour: The End of Boom and Bust?

In: Aspects of Modern Monetary and Macroeconomic Policies

Author

Listed:
  • Philip Arestis
  • Malcolm Sawyer

Abstract

The Labour government elected in May 1997 came into office stressing that it was ‘New Labour’ and pursuing a ‘third way’. In macroeconomic terms, the emphasis was on the avoidance of ‘tax and spend’ policies and restraints on public expenditure along with the adoption of the so-called ‘golden rule’ of public finances (as discussed below). There was something akin to a disavowal of a Keynesian approach to macroeconomic policies and specifically the use of fiscal policy to help steer the economy. There was an emphasis on labour market reforms and flexibility, which would, in effect, lower the ‘non-accelerating rate of unemployment’ and thereby lower unemployment. Whereas previous Labour governments had pursued a range of industrial and regional development policies to stimulate economic growth and lower unemployment, there was a major shift from those policies to those of labour (and to some degree product) market ‘flexibility’.

Suggested Citation

  • Philip Arestis & Malcolm Sawyer, 2007. "Macroeconomic Policy in the UK under New Labour: The End of Boom and Bust?," Palgrave Macmillan Books, in: Philip Arestis & Eckhard Hein & Edwin Heron (ed.), Aspects of Modern Monetary and Macroeconomic Policies, chapter 13, pages 248-270, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-62734-5_13
    DOI: 10.1057/9780230627345_13
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    Cited by:

    1. Eckhard Hein & Achim Truger, 2011. "Fiscal Policy in the Macroeconomic Policy Mix: A Critique of the New Consensus Model and a Comparison of Macroeconomic Policies in France, Germany, the UK and Sweden from a Post-Keynesian Perspective," Chapters, in: Claude Gnos & Louis-Philippe Rochon (ed.), Credit, Money and Macroeconomic Policy, chapter 12, Edward Elgar Publishing.

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