In a new paper written for the Institute of Economic Affairs, titled, Britain's relative economic performance' by leading economic historian Professor Nick Crafts, he states that, "Britain's Labour government has rightly rejected the supply-side policies of its predecessors and must continue to do so, if Britain's productivity performance is to improve",
Professor Crafts, of LSE, analyses Britain's economic performance, in comparison with other countries, since 1870. Over this period real GDP per person has increased to almost six times its 1870 level but, in the world league table, Britain has slipped from second to seventeenth place. Since 1979, relative decline versus OECD countries has virtually ceased but a substantial productivity gap remains with countries such as Germany and the United States.
The most serious economic failures were in the 1950s and up to the 1970s, when the 'interventionist policies and outmoded institutions of early postwar Britain' proved costly, says Crafts.
'reforms pursued by the Conservatives after 1979 and largely accepted subsequently by New Labour have improved the incentive structures facing firms and workers and imply that growth performance has been better than would have been expected under a continuation of the policies of the 1970s.' (page 101)
Labour now promises microeconomic reforms aimed at raising productivity. It is to be hoped, says Crafts, that '...government failure does not get in the way.' (page 99).