BBC Examines Labour's record

The Labour government has assessed itself in its second Annual Report. BBC News Online examines the government's record on economic management.
Managing the economy has been one of the unexpected successes of the Labour government. Most economists give Labour high marks for keeping inflation in check while avoiding a serious recession. And relationships with the City and industry are generally seen as positive. The decision to give independence to the Bank of England is singled out for particular praise. But a number of economists warn that hard decisions could yet lie ahead.
And there are more worries about the management of the micro-economic issues, like deregulation.
Independence for the Bank
The most important economic decision by the new government was to give operational independence to the Bank of England to fix interest rates.
According to Michael Hughes of Barings Asset Management, this was crucial in lowering inflationary expectations. He says that the Bank "aggressively" raised interest rates to curb inflation, and took equally decisive action when there was a danger of a recession setting in.
The government is also praised by economists for introducing tough tests to keep public spending in check. Under the 'golden rule', Chancellor Gordon Brown has said he will only borrow for public investment, not to fund current spending on things like pensions or teachers' salaries.
Read more...