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The Labour government’s response to the economic crisis of 2008 was reckless and irresponsible. Discuss.

The 1998 Comprehensive Spending Review boosted NHS spending by £21 billion 1999-2002 and Education by £19 billion despite a 1% cut in income tax announced in November 1997. Hague and Portillo described this as ‘‘reckless and irresponsible’‘ words that haunted them in the 2001 election. However in the aftermath of the most severe recession that many can remember, these same criticisms re-emerge, only with a little more verbosity. The economy of the United Kingdom had been hit by rising oil prices and the credit crisis. Sir Win Bischoff, chairman of Citigroup, said he believed that house prices in Britain would keep falling for another two years. The Ernst & Young Item club predicted growth of only 1.5 % in 2008, slowing to 1 % in 2009. The Institute of Directors’ quarterly business opinion survey showed business optimism at its lowest level since the survey began in 1996. Deputy Governor of the Bank of England, John Gieve said inflation would accelerate ‘‘well over’‘ 4 % while economic growth is ‘‘slowing fast.’‘ Bank of England Governor Mervyn King said there may be ‘‘an odd quarter or two of negative growth,’‘ following the first quarter of 2009. Nationwide, the UK's biggest building society, warned the UK could head into a recession after house prices in July 2008 fell 8.1 % from the previous year. Standard & Poor's said on 30 July 2008 that 70,000 homeowners were in negative equity and it could rise to 1.7 million or about one in six homeowners in the UK based on an expected 17 % decline into 2009. The Bank of England reported that mortgage approvals fell by a record of nearly 70 %. In other words, the situation was serious. Labour's approach to the very sharp downturn of 2008-9 was a largely Keynesian one. They spent very heavily to save the financial institutions on the point of collapse. A bank rescue package totalling some £500 billion was announced by the British government on 8 October 2008, as a response to the ongoing global financial crisis. After two unsteady weeks at the end of September, the first week of October had seen major falls in the stock market and severe worries about the stability of British banks. The plan aimed to restore market confidence and help stabilise the British banking system, and provided for a range of short-term loans and guarantees of interbank lending, as well as up to £50 billion of state investment in the banks themselves. The announcement occurred less than 48 hours after Britain's leading share index, the FTSE100, recorded its largest single-day points fall since 1987. Alistair Darling, the Chancellor of the Exchequer, told the House of Commons in a statement on 8 October 2008 that the proposals were ‘‘designed to ...

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