Economic Review - Second Quarter 2005 - The post-election landscape

Foreword

Arguably, the new Labour administration won its historic third term in office on the back of a period of unbroken economic growth, low inflation and low unemployment. This record was achieved against a background of pretty volatile international conditions which in previous periods may have caused the UK economy to fall into recession. The era of stable economic conditions has been good for business. The key question is will this continue?

There are many challenges ahead that will need to be addressed with some urgency by the new government. In particular, Roger argues that there will be pressures from the housing market, and the external deficit and public sector finances will present difficulties for the Chancellor if he is to retain his economic record for prudence, keep taxation under control and keep borrowing within the limits required to meet his Golden Rule. More than this, Roger argues that the