The Fiscal Policies of the British Labour Party in Times of Crisis

Abstract

Abstract Chapter 6 studies the fiscal policies of the British Labour Party in response to the Great Recession. The chapter first situates the fiscal policies of the Labour Party in a historic context and uses quantitative content analysis to explore the programmatic response of the centre-left to the economic crisis. This analysis confirms that Labour accepted austerity as the dominant macroeconomic policy, and the chapter then uses elite interviews to draw out the causal mechanisms that pushed the party towards fiscal orthodoxy. It argues that politicians were not ideologues that had accepted the dominance of the market. Instead, the leaders of the Labour Party acted strategically, as they were convinced that the path to power leads through the centre. They sought to establish the party’s perceived fiscal credibility and economic competence to appeal to centrist, middle-class voters who they believed to be fiscal conservatives. Internally, these positions were also legitimized by a set of economic ideas that had been part and parcel of the Third Way. Labour thus supported fiscal consolidation for both strategic and ideational reasons.