Editing Economy of the United Kingdom (section)

===1997 to 2009===
In May 1997, Labour, led by Tony Blair, won the general election after 18 years of Conservative government.<ref>{{cite news|last=Wheeler |first=Brian |url=http://news.bbc.co.uk/1/hi/uk_politics/8149630.stm |title=UK &#124; UK Politics &#124; Election countdown – 1990s style |work=BBC News |date=21 July 2009 |access-date=5 September 2012}}</ref> The Labour Government inherited a strong economy with low inflation,<ref>{{cite news|url=https://www.theguardian.com/news/datablog/2009/mar/09/inflation-economics|title=UK inflation since 1948|first1=Simon|last1=Rogers|first2=Ami|last2=Sedghi|date=12 November 2013|access-date=2 June 2017|website=The Guardian}}</ref> falling unemployment,<ref>{{Cite web |title=Unemployment rate (aged 16 and over, seasonally adjusted): % – Office for National Statistics |url=https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/timeseries/mgsx/lms |access-date=2025-02-27 |website=www.ons.gov.uk}}</ref> and a [[Current account (balance of payments)|current account]] surplus.<ref name="OECD1998">{{cite book|author=OECD|title=OECD Economic Surveys: United Kingdom 1998|url=https://books.google.com/books?id=G3_WAgAAQBAJ&pg=PA20|date=16 July 1998|publisher=OECD Publishing|isbn=978-92-64-15145-1|page=20}}</ref> Blair ran on a platform of [[New Labour]] which was characterised largely by the continuation of neo-liberal economic policies, but also supporting a strong welfare state. In Britain it was largely viewed as a combination of socialist and capitalist policies, being dubbed '[[Third Way]]'.<ref>{{Cite web|url=https://www.theguardian.com/politics/2003/feb/10/labour.uk1|title = A brief history of the third way|website = [[TheGuardian.com]]|date = 10 February 2003}}</ref> Four days after the election, [[Gordon Brown]], the new Chancellor of the Exchequer, gave the Bank of England the freedom to control [[monetary policy]], which until then had been directed by the government.

During Blair's 10 years in office there were 40 successive quarters of economic growth, lasting until the second quarter of 2008. GDP growth, which had briefly reached 4% per year in the early 1990s, gently declining thereafter, was relatively anaemic compared to prior decades, such as the 6.5% per year peak in the early 1970s, although growth was smoother and more consistent.<ref name="ons" /> [[Annual growth rate]]s averaged 2.68% between 1992 and 2007,<ref name="imf" /> with the finance sector accounting for a greater part than previously. The period saw one of the highest GDP growth rates of any developed economy and the strongest of any European nation.<ref>{{cite news|last=Davis |first=Evan |url=http://news.bbc.co.uk/1/hi/uk_politics/6643601.stm |title=Blair's surprising economic legacy |work=BBC News |date=10 May 2007 |access-date=5 September 2012}}</ref> At the same time, [[household debt]] rose from £420&nbsp;billion in 1994 to £1&nbsp;trillion in 2004 and £1.46&nbsp;trillion in 2008 – more than the entire GDP of the UK.<ref>{{cite book|first=Mark|last=Horsley|title=The Dark Side of Prosperity: Late Capitalism's Culture of Indebtedness|url=https://books.google.com/books?id=QMfVBgAAQBAJ&pg=PA31|date=28 March 2015|publisher=Ashgate Publishing|isbn=978-1-4724-3657-3|page=31}}</ref>

This extended period of growth ended in [[Calendar year#Quarters|Q2]] of 2008 when the United Kingdom entered the [[Great Recession]] brought about by the [[2008 financial crisis]]. The UK was particularly vulnerable to the crisis because its financial sector was the most highly [[leveraged]] of any major economy.<ref name="GiudiceKuenzel2012">{{cite book|first1=Gabriele|last1=Giudice|first2=Robert|last2=Kuenzel|first3=Tom|last3=Springbett|title=UK Economy: The Crisis in Perspective|url=https://books.google.com/books?id=02hd8pJhDAMC&pg=PA205|year=2012|publisher=Routledge|isbn=978-1-136-31210-6|page=205}}</ref> Beginning with the collapse of [[Northern Rock]], which was taken into [[public ownership]] in February 2008, other banks had to be partly nationalised. The [[Royal Bank of Scotland Group]], at its peak the fifth-largest bank in the world by [[market capitalisation]], was effectively nationalised in October 2008. By mid-2009, [[HM Treasury]] had a 70.33% controlling shareholding in RBS, and a 43% shareholding, through the [[UK Financial Investments Limited]], in [[Lloyds Banking Group]]. The Great Recession, as it came to be known, saw unemployment rise from just over 1.6&nbsp;million in January 2008 to nearly 2.5&nbsp;million by October 2009.<ref>{{cite news|url=http://news.bbc.co.uk/1/hi/business/7304330.stm |title=UK unemployment falls by 32,000 |work=BBC News |date=19 March 2008 |access-date=5 September 2012}}</ref><ref>{{cite news|url=http://news.bbc.co.uk/1/hi/business/8415683.stm |title=Unemployment rise continues to slow |work=BBC News |date=16 December 2009 |access-date=5 September 2012}}</ref>

In August 2008 the IMF warned that the country's outlook had worsened due to a twin shock: financial turmoil and rising commodity prices.<ref>{{cite web|url=http://www.imf.org/external/pubs/ft/survey/so/2008/CAR081108A.htm |title=Twin Global Shocks Dent United Kingdom Outlook |publisher=Imf.org |date=11 August 2008 |access-date=5 September 2012}}</ref> Both developments harmed the UK more than most developed countries, as it obtained revenue from exporting financial services while running deficits in goods and commodities, including food. In 2007, the UK had the world's third largest [[List of countries by current account balance|current account deficit]], due mainly to a large deficit in manufactured goods. In May 2008, the IMF advised the UK government to broaden the scope of fiscal policy to promote external balance.<ref>{{cite web|url=http://www.imf.org/external/np/ms/2008/052308.htm |title=United Kingdom – 2008 Article IV Consultation Concluding Statement of the Mission, 23 May 2008 |publisher=Imf.org |date=23 May 2008 |access-date=5 September 2012}}</ref> The UK's output per hour worked was on a par with the average for the "old" [[Statistics relating to enlargement of the European Union#1995 enlargement|EU-15]] countries.<ref name="europa2">{{cite web|url=http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996,39140985&_dad=portal&_schema=PORTAL&screen=detailref&language=en&product=STRIND_ECOBAC&root=STRIND_ECOBAC/ecobac/eb022|title=Labour productivity per hour worked|publisher=epp.eurostat.ec.europa.eu|access-date=25 September 2014|url-status=dead|archive-url=https://web.archive.org/web/20120520171740/http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996%2C39140985&_dad=portal&_schema=PORTAL&screen=detailref&language=en&product=STRIND_ECOBAC&root=STRIND_ECOBAC%2Fecobac%2Feb022|archive-date=20 May 2012}}</ref>