Editing Norman Lamont (section)

=== Fiscal policy ===
By the time Lamont was appointed Chancellor, the Conservative government's principal economic objective was to regain control of inflation. The Thatcher government had been elected in 1979 on a manifesto that had listed restoration of sound money as its first priority.<ref>{{cite web |url=http://www.conservative-party.net/manifestos/1979/1979-conservative-manifesto.shtml |title=1979 Conservative Party Manifesto |publisher=Conservative-party.net |access-date=30 May 2010 |archive-date=1 August 2010 |archive-url=https://web.archive.org/web/20100801090259/http://www.conservative-party.net/manifestos/1979/1979-conservative-manifesto.shtml |url-status=live }}</ref> Having peaked at 21.9% in 1980, inflation (as measured by the 12-month increase in the Retail Prices Index) fell to 3.3% at the beginning of 1988. However, controlling inflation through the targeting of the growth of the domestic money supply, as proposed in that manifesto, turned out to be more problematic than its authors had envisaged and during his time as Chancellor, Lawson had increasingly been drawn instead to targeting the exchange rate to provide an external monetary anchor.<ref>Nigel Lawson, ''The View from No. 11'', Bantam Press (1992), pp. 418–420.</ref> From its low point in February 1988, inflation rose with apparent inexorability: of the 31 months until it peaked at 10.9% in October 1990, there were only four months when inflation fell.<ref name="statistics.gov.uk">{{cite web |url=http://www.statistics.gov.uk/downloads/theme_economy/RP04.pdf |title=Archived copy |access-date=23 April 2009 |url-status=dead |archive-url=https://web.archive.org/web/20090419091737/http://www.statistics.gov.uk/downloads/theme_economy/RP04.pdf |archive-date=19 April 2009}}</ref> In response, interest rates were progressively increased, doubling from 7.4% in June 1988 to 15% in October 1988, being cut by one point to 14% when the pound entered the ERM, the level of interest rates Lamont inherited as chancellor.<ref name="bankofengland.co.uk">{{cite web |url=http://www.bankofengland.co.uk/statistics/rates/baserate.pdf |title=baserate.xls |access-date=30 May 2010 |archive-date=2 January 2011 |archive-url=https://web.archive.org/web/20110102100001/http://www.bankofengland.co.uk/statistics/rates/baserate.pdf |url-status=live }}</ref> As a result, the economy began to slow, contracting by 1.1% in the third quarter of 1990 and shrinking a further 0.7% in the final quarter of the year.<ref>Office for National Statistics, YBEZ Gross domestic product index: CVM: Seasonally adjusted, Constant 2003 prices, Updated on 25 February 2009.</ref> Thus Lamont's period as Chancellor started with inflation at its highest level since 1982 and the economy in recession.

Asked at his first appearance as chancellor at the [[Treasury Select Committee]] whether he agreed with his predecessor's view on the depth and duration of the recession and not wishing to contradict Major, Lamont replied that "there are reasons why one could believe that it will be relatively short-lived and relatively shallow."<ref>Norman Lamont, ''In Office'', Little, Brown and Company (1999), p. 37.</ref> In October 1991, based on [[Confederation of British Industry|CBI]] and [[Institute of Directors]] business surveys, he said "what we are seeing is the return of that vital ingredient – confidence. The [[Green shoots]] of economic spring are appearing once again."<ref>Norman Lamont, ''In Office'', Little, Brown and Company (1999), pp. 140–141.</ref> The comment was widely criticised as premature.<ref>{{Cite news|url=http://news.bbc.co.uk/1/hi/uk_politics/7829355.stm|title = Lamont's 'green shoots' address|date = 14 January 2009}}</ref> However, [[Gavyn Davies]], then chief economist at [[Goldman Sachs]], wrote in a newspaper article at the time of Lamont's removal from the Treasury that the "Green shoots" speech had turned out to be "remarkably prescient. From that moment onwards, output stopped declining, and within a few months, it started to rise.<ref>''The Independent'', 28 May 1993.</ref> Estimates of [[Gross Domestic Product]] show the trough of the recession occurring in the fourth quarter of 1991, with sustained growth resuming in the third quarter of 1992, when GDP grew 0.4% compared to the second quarter.<ref>Office for National Statistics, YBEZ Gross domestic product index: CVM: Seasonally adjusted, Constant 2003 prices, Updated on 25 February 2009; http://www.statistics.gov.uk/downloads/theme_economy/RP04.pdfInsert{{dead link|date=March 2018 |bot=InternetArchiveBot |fix-attempted=yes}}</ref>