Lawson Boom
The 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 Nigel Lawson.
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. 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 (in particular the 1988 budget) unleashed an inflationary spiral.
In 1990, the phrase was used by Shadow Chancellor of the Exchequer John Smith . In a House of Commons debate, he quoted a report which said:
- There have been three phases of this sort, all of which had serious consequences.
- (a) Maudling's dash for growth 1963-64 ;
- (b) Barber's boom, 1972-73 ;
- (c) The Lawson boom, 1986-88. [1]
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.
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