Economic analysis and editorial
The Conservatives’ claim to be the party of fiscal responsibility is wrong. From 1979 to 2024, public sector net borrowing averaged 4.07% of GDP across the two Conservative-led spells, compared with 2.74% under Labour. Those averages span different crises and starting conditions. The party’s own decisions also deserve scrutiny, especially the Brexit trading settlement and the 2022 mini-budget. ONS borrowing series Their record from Margaret Thatcher’s election in 1979 to the change of government in July 2024 gives voters plenty of reasons to question that claim. The Thatcher and Major governments achieved the fastest growth per person of the three periods examined here and left a lower debt ratio than they inherited. Blair and Brown presided over lower inflation and lower average borrowing. The Conservative-led governments after 2010 achieved the highest employment rate, but delivered the weakest growth in productivity and real wages.
Those differences matter. So do decisions that a table of averages can hide. The Conservatives changed who could own and rent a home, oversaw a credit-fuelled housing boom and its aftermath, replaced deep access to Britain’s largest export market with a looser trade agreement, and in 2022 announced a fiscal package that was followed by emergency intervention in the gilt market. The record deserves to be judged in full.
1. The scorecard from Thatcher to Sunak
| Measure | Thatcher–Major 1979–97 | Blair–Brown 1997–2010 | Cameron–Sunak 2010–24 |
|---|---|---|---|
| Real GDP per person, annual growth | 2.0% | 1.4% | 0.8% |
| Real wages, annual growth | 2.7% | 1.9% | 0.2% |
| Average unemployment | 9.3% | 5.7% | 5.5% |
| Average consumer price inflation | 6.0% | 1.9% | 2.8% |
| Output per hour, average annual growth | 2.29% | 1.60% | 0.57% |
| Employment rate, ages 16–64 | 69.1% | 72.4% | 73.9% |
| Economic inactivity, ages 16–64 | 23.5% | 23.3% | 21.9% |
| Average net borrowing, share of GDP | 2.94% | 2.74% | 5.52% |
| Public sector net debt, share of GDP | 42.2% → 36.7% | 36.7% → 64.7% | 64.7% → 98.1% |
| Average public net investment, share of GDP | 1.2% | 1.5% | 2.1% |
| Average business investment, share of GDP | Comparable series starts in 1997 | 11.0% | 10.6% |
| Average current account balance, share of GDP | −0.8% | −2.3% | −3.1% |
GDP per head, real wages and unemployment are the Resolution Foundation’s historical comparison. Its final period includes a March 2024 forecast for 2024. The other calendar-year averages use full years in office: 1980–96, 1998–2009 and 2011–23. Fiscal averages use April–March years ending in 1980–97, 1998–2010 and 2011–24, and debt uses March snapshots in the handover years. The 2010–24 period includes the Conservative–Liberal Democrat coalition. These descriptive comparisons reflect inherited conditions and external shocks as well as policy. Resolution Foundation, figure 3 · World Bank consumer prices via FRED · ONS productivity · ONS employment · ONS inactivity · ONS borrowing · House of Lords debt series · ONS public investment · ONS business investment · ONS nominal GDP · ONS current account
2. Growth, pay and the kind of work people could get
Weighting the two Conservative-led spells by years in office gives around 1.5% annual growth per person against Labour’s 1.4%. Real wages grew around 1.6% a year across the Conservative spells against Labour’s 1.9%, and unemployment averaged around 7.6% against Labour’s 5.7%. Labour also recorded lower consumer price inflation, 1.9% compared with 4.6% across both Conservative spells. Much of that inflation gap reflects the high rates of the early 1980s. The World Bank series puts annual inflation around 18% in 1980 and below 3% in 1996. The later Conservative period included the post-pandemic surge, with ONS twelve-month CPI inflation reaching 11.1% in October 2022. Historical growth, pay and unemployment · Annual consumer prices · ONS monthly CPI
Output per hour, average annual growth
The later Conservative-led period combines higher employment with much weaker productivity. Working-age employment reached 76.1% in 2019 and inactivity fell to 20.8%. Inactivity then rose to 21.7% in 2023. A person can be employed on a zero-hours contract without guaranteed shifts. In April–June 2024, an estimated 1.03 million people reported one in their main job. The Labour Force Survey can count a person as employed during a reference week in which they worked no hours if they remained in a job. The classification applies across governments. Counting people in jobs therefore needs to be accompanied by evidence about actual hours, underemployment and income security. ONS employment series · ONS inactivity series · Commons Library on zero-hours contracts · ONS classification guidance · ONS zero-hours contract dataset
3. Household incomes, inequality and child poverty
IFS calculations put annual real median household income growth in Great Britain before housing costs at about 1.6% under both the Conservatives from 1979 to 1996–97 and Labour from 1996–97 to 2009–10. The Resolution Foundation’s estimate of 0.5% a year from 2009–10 to 2023–24 covers UK non-pensioner households after housing costs. It shows slow improvement for that group. A precise three-way ranking requires one consistent income measure and population. IFS historical income comparison · IFS figures through 2009–10 · Resolution Foundation on incomes since 2010
The disposable-income Gini before housing costs rose from about 0.25 in 1979 to around 0.34 in the early 1990s. It approached 0.36 late in the Blair–Brown years, fell back around the financial crisis and stood at 0.35 in 2023–24. Relative child poverty after housing costs rose substantially under Thatcher and Major, fell under Labour and rose again in the later Conservative-led era. The IFS found it fell from 33% in 1997–98 to 28% in 2003–04 as employment incomes and tax credits helped raise incomes for poorer families. In 2023–24 it was 31%. The poverty threshold is 60% of contemporary median income after housing costs. IFS historical Gini series · DWP income distribution · IFS child poverty and tax credits · IFS child poverty history
4. Fiscal responsibility, borrowing and investment
Average annual public sector net borrowing as a share of GDP
Thatcher and Major were the only spell to finish with a lower debt-to-GDP ratio than they inherited. The ratio fell from 42.2% in March 1979 to 21.7% in March 1991, then climbed to 36.7% in March 1997. Labour’s ratio was 35.6% in March 2008 and rose to 64.7% by March 2010 after the financial crash. The later Conservative-led governments reduced annual borrowing to 2.0% of GDP by 2018–19, but debt was already 80.3% of GDP by March 2019. Pandemic borrowing reached 14.7% of GDP in 2020–21, and debt was 98.1% by March 2024. Labour’s average borrowing was about 2.74% of GDP against about 4.07% across both Conservative spells. A crisis can justify borrowing, and the choice of starting and ending dates matters. House of Lords debt evidence · ONS annual borrowing series
The later Conservative-led period had the strongest public net investment result, at 2.1% of GDP on average, against 1.5% under Labour and 1.2% under Thatcher and Major. Business investment averaged 11.0% under Blair and Brown and 10.6% in the later Conservative period on the comparable ONS series. Britain’s average current account deficit widened across the three spells, from 0.8% of GDP to 2.3% and 3.1%. The current account includes trade, income and transfers with the rest of the world. Its sustainability depends in part on how the deficit is financed and what that financing supports. ONS public net investment · ONS business investment · ONS current account
5. Right to Buy, the credit boom and the price of a first home
Right to Buy gave sitting tenants the chance to buy at a discount and benefit from subsequent increases in their homes’ value. Each sale transferred an existing home out of the social stock unless it was replaced. In England more than two million social homes were sold through Right to Buy schemes between April 1980 and March 2025. Council ownership also shrank through transfers of about 1.34 million homes to housing associations. Those transfers generally left homes within the social sector and need to be distinguished from sales. The policy began under Thatcher and continued under governments of both parties. IFS research on Right to Buy · Official Right to Buy totals · Council stock transfers and sales · England’s Right to Buy sales and replacements
From 1985 to 1989, the mix-adjusted price index for homes bought with building-society mortgages rose 102% across the UK and 119% in the West Midlands. The Bank of England identified easier mortgage credit and a limited housing supply response as drivers. In March 1988, ministers announced that from August mortgage interest tax relief would be limited to £30,000 of borrowing per property. Eligible joint buyers had an incentive to bring purchases forward. Transactions averaged 12,000 more a month in the five months after the announcement than in the preceding five, and annual transactions peaked at roughly two million in 1988. Prices fell and arrears and repossessions rose in the early 1990s. The evidence for a short-term rush is clearest on credit and tax policy. Right to Buy’s clearest long-term effect was on the availability of social housing. Hansard regional price indices · Bank of England on credit and supply · Bank of England on the tax deadline and transactions · Bank of England on arrears and repossessions
First-time purchase price relative to recorded buyer income
The price of getting onto the ladder and the monthly mortgage bill are separate measures. Nationwide estimated that a typical first-time buyer on average earnings, with a 20% deposit, would spend 36% of take-home pay on repayments at the end of 2024, above its long-run average of 30%. High rates could also make payments punishing in the 1980s and early 1990s. The official rate reached 17% in November 1979. On Black Wednesday in September 1992 the authorities raised the rate from 10% to 12% and announced 15% for the next day. The 15% rate never took effect. A consistent mortgage-payment series would be needed to compare peak monthly burdens across eras. Nationwide mortgage affordability · Bank Rate history · Bank of England on Black Wednesday
6. Brexit and the decision the referendum left open
Leave won 51.9% to 48.1% in June 2016. The referendum asked whether Britain should remain in the European Union or leave. It specified neither a future trading arrangement nor a mechanism to implement the result. Voters could favour leaving for different reasons and still disagree about whether to retain single-market or customs arrangements. Conservative governments made the later choice to leave both the single market and the customs union. That decision belongs in their economic record. Electoral Commission result · Referendum Act · Commons Library on legal effect
The Treasury did publish economic warnings before the vote. The fundamental problem was that voters had no negotiated deal against which to test them. Vote Leave also promoted the claim that £350 million a week could be freed up for domestic priorities. The UK Statistics Authority warned that the presentation could mislead. The gross figure omitted the UK rebate, which reduced the payment, and did not account for EU expenditure in the UK when presented as money available to spend elsewhere. Responsibility for those choices rests with the people who designed the vote and ran the campaign. Treasury’s pre-referendum analysis · Statistics Authority warning · UK Statistics Authority statement on EU contributions
7. Trade deals promised and delivered
Liam Fox suggested continuity deals could roll over immediately. The UK formally left the EU on 31 January 2020 and its transition ended on 31 December. By that deadline the National Audit Office counted 33 converted EU trade agreements out of 39 the department aimed to convert. The 2019 Conservative manifesto set an aim of 80% trade coverage within three years. In January 2023, ministers told Parliament that agreements had been secured with 71 countries plus the EU. Those partners represented 63% of UK bilateral trade using 2021 figures. Partner coverage counts deals preserving existing trade and says little about additional exports. Liam Fox’s evidence to Parliament · National Audit Office trade negotiations report · 2019 manifesto · January 2023 ministerial answer
Trade agreement coverage against the Conservatives’ target
The EU Trade and Cooperation Agreement gave qualifying goods tariff-free and quota-free access, subject to rules of origin and customs formalities. Japan’s January 2021 agreement adapted existing EU–Japan access. The government’s 0.07% long-run GDP estimate used no UK–Japan deal as its baseline. Australia and New Zealand’s deals took effect in 2023. The government projected long-run gains of 0.08% and 0.03% of GDP, respectively. Comprehensive US talks stalled, and Labour later agreed the narrower Economic Prosperity Deal in 2025. CPTPP accession began to take effect in December 2024 after negotiations under the Conservatives. The India agreement was signed under Labour in July 2025 and took effect in July 2026. Those later agreements belong in the chronology even though this government scorecard ends in July 2024. EU treaty text · Commons Library agreement tracker · Japan impact assessment · Australia and New Zealand estimates · US trade talks · CPTPP · India deal
How the referendum became a new trade regime
- June 2016 · Referendum majority for Leave
- January 2020 · Formal departure and start of transition
- December 2020 · Trade agreement signed and transition ends
- January 2021 · New trade rules apply
Watch Sky News footage of Boris Johnson signing the EU trade agreement in December 2020.
8. What was lost in trade, output and tax revenue?
Export sales. LSE researchers estimated that the new trading arrangements reduced total UK goods exports by £27 billion in 2022, or 6.4% against a continued-membership scenario. Goods exports to the EU were an estimated 13.2% lower. The research used data from over 100,000 firms. The £27bn refers to goods sales in a single year. Services and tax receipts are separate. LSE research paper · LSE results summary
In 2024 the EU still accounted for 41% of UK exports and 51% of UK imports. Those are observed shares of goods and services trade. They give a sense of the market’s size and use a different measure from the estimated goods exports lost because of Brexit. Commons Library statistics on UK trade with the EU
Investment and output. Bank of England staff estimated that anticipation of Brexit reduced business investment by around 11% over the three years after the referendum. The OBR assumes that the post-Brexit relationship will leave long-run productivity 4% lower and both exports and imports around 15% lower than under continued membership. A separate working paper revised in June 2026 estimated that GDP was 6–8% lower by the end of 2025. These studies examine different outcomes, dates and counterfactuals. Their estimates cannot be added. Bank of England staff working paper · OBR Brexit assumptions · OBR review of its Brexit trade assumptions · NBER working paper and June 2026 revision
Tax revenue. A widely cited £40bn-a-year figure comes from 2022 reporting based on Centre for European Reform modelling. It is a counterfactual estimate, with uncertainty about how much Britain would otherwise have grown and the tax receipts associated with that growth. When asked in late 2025, the Treasury did not provide a standalone annual tax-loss number. A full fiscal calculation must also allow for reduced EU contributions and changes to domestic spending. The more secure conclusion is that weaker output erodes the tax base, with the exact annual cost open to debate. CER on the £40bn estimate · Treasury’s parliamentary answer
9. The mini-budget was a test of fiscal credibility
Kwasi Kwarteng presented the September 2022 Growth Plan without an accompanying published OBR forecast. Within days the Bank of England announced temporary gilt purchases because dysfunction in the market threatened financial stability. The Bank’s intervention illustrates the practical cost of losing credibility with the market that finances the government. The OBR correspondence and the Bank’s account let readers trace the chronology directly. OBR preparatory work · Bank of England intervention · Bank of England Financial Stability Report, December 2022
Watch Kwasi Kwarteng’s full 23 September 2022 Commons statement, via Sky News.
10. What the record supports
The Conservatives can point to the Thatcher–Major years for stronger growth and a falling debt ratio, and to the later spell for higher employment and public investment. Labour can point to lower average borrowing, inflation and unemployment compared with both Conservative spells combined, stronger real wage growth on that comparison, and a fall in relative child poverty during its time in office. The narrow Conservative lead on GDP per person and the near tie on productivity are poor grounds for claiming that either party has an automatic advantage.
The record since Thatcher does not support the Conservatives’ claim to be the party of fiscal responsibility. Their best results deserve credit. So do the consequences of choices their ministers made. Right to Buy rewarded many purchasers while reducing the stock available to future social tenants unless homes were replaced. The Brexit trade strategy preserved some existing access and opened some new markets, while the settlement made trade with the EU materially harder. The mini-budget exposed the consequences of announcing major fiscal changes without publishing an independent forecast alongside them. Voters can judge those decisions on what they achieved, what they cost, and who paid for them.
Sources and how to check the figures
Labour market and prices
Quarterly main-job estimates. See April–June 2024 for the comparison in the article. ONS zero-hours contract dataset
The annual series underlying the inflation averages. World Bank UK consumer price inflation
Housing and mortgage costs
Check sales and eligible replacement starts and acquisitions. The replacement figures cover the programme defined in the release. England’s Right to Buy sales and replacements
A separate price-to-earnings series based on sales and full-time earnings, from 1997. See figures 1 and 2. ONS housing affordability in England and Wales
Contemporaneous regional price levels and annual changes before the peak. Hansard, regional house prices in early 1988
Brexit, trade and tax revenue
The Authority’s public explanation of the rebate and how the gross contribution was presented. UK Statistics Authority statement on EU contributions
Recorded exports and imports, including separate figures for goods and services. Commons Library statistics on UK trade with the EU
The OBR tests its assumptions against observed goods and services trade and discusses the data limitations. OBR review of its Brexit trade assumptions
The projected effects of joining and the baseline used to estimate them. Department for Business and Trade assessment of CPTPP accession
The 2022 mini-budget
The Bank’s account of gilt-market disruption and the pressures on liability-driven investment funds. Bank of England Financial Stability Report, December 2022
Featured image is an AI-generated conceptual illustration of Westminster and the economic themes in this article.