Former Bank of England Governor, Mervyn King, was yesterday awarded the UK’s highest honour in his appointment to the Order of the Garter. The honour, which is given annually on St.George’s day, sees Sir Mervyn join only 22 other Knights and Ladies Companion. One of them, Sir John Major, is perhaps the one who we can learn the most from when it comes to economics, however.
Sir John was the chosen successor to Margaret Thatcher following his tenure as Chancellor of the Exchequer, and he (somewhat unexpectedly) went on to win the general election in 1992.
Although ‘Black Wednesday’ was a lethal blow from which the Conservative Party would not quickly recover, the economy that Sir John Major’s Conservative government left behind is a far cry from the one that was left following thirteen years of Labour government – and one the current government would do well to emulate.
Public sector borrowing was set on a firm downward trend, with prudence being the mantra of his government. His Chancellor Ken Clarke resisted the urge for a spending splurge in the run up to 1997, and instead enacted only modest tax cuts.
Although the Sunday Times slammed the budget as doing little more than showing that a “Conservative government will not do very much and will do that little rather badly”, it begs the question as to why it was that even supposedly right wing papers such as The Times condemned a right wing government for being responsible stewards of the economy rather than going for broke with unfunded spending pledges and pre-election sweeteners.
Furthermore, his government also left a trade surplus (illustrated below) – something the UK can now only dream of with a trade deficit that grew and grew once Labour came to office and currently hovers at around £10 billion each month.
Above: UK Balance of Trade
Inflation had also been bought firmly under control from 9.3 percent in 1990 to 3.4 percent in 1997, and unemployment was also on a firm downward trend.
Although John Major has committed much of his time after politics to promoting the cause of social mobility, famously hitting out at a ‘shocking ‘ dominance of privately educated individuals in the upper echelons of power, he would do well to remind us of the valuable economic lessons that can be learned from his time in office.