Labour ’caused’ Financial Crash 2008

MYTH – “Labour caused crash of 2008”.

The debt based, neoliberal economic policies conceived during the Thatcher/ Reagan era – deregulation, privatisation, tax cuts, small state, big business – has dominated the global political landscape since the early 1980’s. The public sector, private businesses and households built-up a mountain of debt during this period. The overall debt burden increased to unsustainable levels as light-touch banking regulation enabled financial institutions to flood the market with toxic financial products. The lethal combination of high debt levels, poor bank balance sheets and the USA sub-prime mortgage crisis triggered the global crisis throughout the interconnected world of finance.

Between 1997-2010 Labour Government invested heavily rebuilding the public sector infrastructure such as schools, roads, hospitals that were neglected during 18 years of Conservative rule. The investments were funded by additional tax revenues generated from the poorly regulated financial services sector and public sector borrowing.

Labour could have reduced impact of the financial crisis of 2008 had they:

  • Not supported and implemented banking deregulation championed by Conservative party
  • Not continued to allow private banks profiting from newly created money at the expense of the taxpayer (because taxpayers end up paying the cost of financial crises caused by banks).
  • Implemented the Quantitative Easing (QE) program for the benefit of the public
  • Mandated Bank of England to consider both inflation and unemployment level targets when considering monetary policy.

But Labour were not responsible for the financial crash of 2008.


Instead Labour

  • introduced the minimum wage
  • brought us record spending on health and education
  • lifted tens of thousands of children out of poverty
  • brought in tax credits to help the working poor make ends meet
  • repealed vicious anti-trade union legislation, put in place by the Tories to stop working people having a voice

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