Lawson Boom


The Lawson Boom was the macroeconomic conditions prevailing in the United Kingdom at the end of the 1980s, which became associated with the policies of Margaret Thatcher's Chancellor of the Exchequer, Nigel Lawson.
The term Lawson Boom was used by analogy with the phrase "The Barber Boom", an earlier period of rapid expansion under the tenure as chancellor of Anthony Barber in the Conservative government of Edward Heath. Critics of Lawson assert that a combination of the abandonment of monetarism, the adoption of a de facto exchange-rate target of 3 deutschmarks to the pound, and excessive fiscal laxity unleashed an inflationary spiral.
The economic boom saw strong economic growth during the second half of the 1980s, sparking a sharp fall in unemployment, which was still in excess of 3 million at the end of 1986, but had fallen to 1.6 million by the end of 1989.
In 1990, Shadow Chancellor of the Exchequer John Smith referred to the period as the "Lawson boom" in a House of Commons debate, quoting a report which said:

  1. Maudling's dash for growth 1963–64;
  2. Barber's boom, 1972–73;

  3. The Lawson boom, 1986–88."
The "dash for growth" had failed to save the Conservative government from electoral defeat at the hands of Labour in the 1964 general election, and was followed by a difficult period for the economy in the second half of the 1960s. The "Barber Boom" a decade later had contributed to a recession and was a factor in the Conservatives losing to Labour again after the February 1974 general election.
The inflationary pressures of the Lawson Boom were one of the reasons given for the UK's entry into the European Exchange Rate Mechanism in October 1990, a move that was supposed to help restrain inflation in the UK by "importing" the anti-inflationary credibility of the Bundesbank. However, the economy fell into its third recession in less than 20 years, with unemployment coming close to 3 million by the end of 1992, even though this time the Conservatives managed to gain re-election.