The economics of New Labour: policy and performance

This paper reviews the foundations of New Labour's economic policies and the performance of the economy since 1997. It argues that New Labour's policies have evolved from Thatcherism and that it has largely embraced the tenets of neo-liberalism. New Labour has rejected most aspects of Keynesianism and its policies have eschewed the use of active demand management policies. But it has been the high levels of demand—in particular consumption expenditure—that have driven economic growth in the UK and which have ensured that (as yet) New Labour has not faced the problems of dealing with a major economic downturn.