"Lawson Boom" is a term used to describe the macroeconomic conditions prevailing in the United Kingdom at the end of the 1980s, which were indelibly associated with the policies of Chancellor of the Exchequer

Chancellor of the Exchequer

The Chancellor of the Exchequer is the title held by the British Cabinet minister who is responsible for all economic and financial matters. Often simply called the Chancellor, the office-holder controls HM Treasury and plays a role akin to the posts of Minister of Finance or Secretary of the...

 Nigel Lawson

Nigel Lawson

Nigel Lawson, Baron Lawson of Blaby, PC , is a British Conservative politician and journalist. He was a Member of Parliament representing the constituency of Blaby from 1974–92, and served as the Chancellor of the Exchequer in the government of Margaret Thatcher from June 1983 to October 1989...

.

The term was used by analogy with the phrase 'The Barber Boom', which describes an earlier period of rapid expansion under the tenure as chancellor of Anthony Barber in the Conservative government of Sir Edward Heath

Edward Heath

Sir Edward Richard George "Ted" Heath, KG, MBE, PC was a British Conservative politician who served as Prime Minister of the United Kingdom and as Leader of the Conservative Party ....

. Critics of Lawson assert that a combination of the abandonment of monetarism

Monetarism

Monetarism is a tendency in economic thought that emphasizes the role of governments in controlling the amount of money in circulation. It is the view within monetary economics that variation in the money supply has major influences on national output in the short run and the price level over...

, the adoption of a de facto exchange-rate target of 3 deutschmarks to the pound, and excessive fiscal laxity (in particular the 1988 budget) unleashed an inflationary spiral.

In 1990, the phrase was used by Shadow Chancellor of the Exchequer

Shadow Chancellor of the Exchequer

The Shadow Chancellor of the Exchequer in the British Parliamentary system is the member of the Shadow Cabinet who is responsible for shadowing the Chancellor of the Exchequer. The title is in the gift of the Leader of the Opposition but is informal. The Shadow Chancellor has no constitutional...

 John Smith

John Smith (UK politician)

John Smith was a British Labour Party politician who served as Leader of the Labour Party from July 1992 until his sudden death from a heart attack in May 1994...

. In a House of Commons

British House of Commons

The House of Commons is the lower house of the Parliament of the United Kingdom, which also comprises the Sovereign and the House of Lords . Both Commons and Lords meet in the Palace of Westminster. The Commons is a democratically elected body, consisting of 650 members , who are known as Members...

 debate, he quoted a report which said:

There have been three phases of this sort, all of which had serious consequences.

(a) Maudling

Reginald Maudling

Reginald Maudling was a British politician who held several Cabinet posts, including Chancellor of the Exchequer. He had been spoken of as a prospective Conservative leader since 1955, and was twice seriously considered for the post; he was Edward Heath's chief rival in 1965...

's dash for growth 1963-64 ;

(b) Barber's boom, 1972-73 ;

(c) The Lawson boom, 1986-88.

The inflationary pressures of the Lawson Boom were one of the reasons given for the UK's entry into the European Exchange Rate Mechanism

European Exchange Rate Mechanism

The European Exchange Rate Mechanism, ERM, was a system introduced by the European Community in March 1979, as part of the European Monetary System , to reduce exchange rate variability and achieve monetary stability in Europe, in preparation for Economic and Monetary Union and the introduction of...

in October 1990, a move that was supposed to help restrain inflation in the UK by "importing" the anti-inflationary credibility of the Bundesbank.

External links

• Miraculous failure
• The awful warning of the Lawson boom