section_path: History/1997 to 2009
section_name: 1997 to 2009
paragraph_text: 1997 to 2009
  
  In May 1997, Labour, led by Tony Blair, won the general election following 18 years of Conservative government. The Labour Government inherited a strong economy with low inflation, falling unemployment, and a current account surplus. Blair ran on a platform of New Labour which was characterised largely by the continuation of neo-liberal economic policies, but also supporting a strong welfare state. In Britain it was largely viewed as a combination of socialist and capitalist policies, being dubbed ' Third Way '. Four days after the election, Gordon Brown, the new Chancellor of the Exchequer, gave the Bank of England the freedom to control monetary policy, which until then had been directed by the government.
  
  During Blair's 10 years in office there were 40 successive quarters of economic growth, lasting until the second quarter of 2008. GDP growth, which had briefly reached 4% per year in the early 1990s, gently declining thereafter, was relatively anaemic compared to prior decades, such as the 6.5% per year peak in the early 1970s, although growth was smoother and more consistent. Annual growth rates averaged 2.68% between 1992 and 2007, with the finance sector accounting for a greater part than previously. The period saw one of the highest GDP growth rates of any developed economy and the strongest of any European nation. At the same time, household debt rose from £420 billion in 1994 to £1 trillion in 2004 and £1.46 trillion in 2008 – more than the entire GDP of the UK.
  
  This extended period of growth ended in Q2 of 2008 when the United Kingdom entered the Great Recession brought about by the 2008 financial crisis. The UK was particularly vulnerable to the crisis because its financial sector was the most highly leveraged of any major economy. Beginning with the collapse of Northern Rock, which was taken into public ownership in February 2008, other banks had to be partly nationalised. The Royal Bank of Scotland Group, at its peak the fifth-largest bank in the world by market capitalisation, was effectively nationalised in October 2008. By mid-2009, HM Treasury had a 70.33% controlling shareholding in RBS, and a 43% shareholding, through the UK Financial Investments Limited, in Lloyds Banking Group. The Great Recession, as it came to be known, saw unemployment rise from just over 1.6 million in January 2008 to nearly 2.5 million by October 2009.
  
  In August 2008 the IMF warned that the country's outlook had worsened due to a twin shock: financial turmoil and rising commodity prices. Both developments harmed the UK more than most developed countries, as it obtained revenue from exporting financial services while running deficits in goods and commodities, including food. In 2007, the UK had the world's third largest current account deficit, due mainly to a large deficit in manufactured goods. In May 2008, the IMF advised the UK government to broaden the scope of fiscal policy to promote external balance. The UK's output per hour worked was on a par with the average for the "old" EU-15 countries.
  
  In May 1997, Labour, led by Tony Blair, won the general election following 18 years of Conservative government. The Labour Government inherited a strong economy with low inflation, falling unemployment, and a current account surplus. Blair ran on a platform of New Labour which was characterised largely by the continuation of neo-liberal economic policies, but also supporting a strong welfare state. In Britain it was largely viewed as a combination of socialist and capitalist policies, being dubbed ' Third Way '. Four days after the election, Gordon Brown, the new Chancellor of the Exchequer, gave the Bank of England the freedom to control monetary policy, which until then had been directed by the government.
  
  During Blair's 10 years in office there were 40 successive quarters of economic growth, lasting until the second quarter of 2008. GDP growth, which had briefly reached 4% per year in the early 1990s, gently declining thereafter, was relatively anaemic compared to prior decades, such as the 6.5% per year peak in the early 1970s, although growth was smoother and more consistent. Annual growth rates averaged 2.68% between 1992 and 2007, with the finance sector accounting for a greater part than previously. The period saw one of the highest GDP growth rates of any developed economy and the strongest of any European nation. At the same time, household debt rose from £420 billion in 1994 to £1 trillion in 2004 and £1.46 trillion in 2008 – more than the entire GDP of the UK.
  
  This extended period of growth ended in Q2 of 2008 when the United Kingdom entered the Great Recession brought about by the 2008 financial crisis. The UK was particularly vulnerable to the crisis because its financial sector was the most highly leveraged of any major economy. Beginning with the collapse of Northern Rock, which was taken into public ownership in February 2008, other banks had to be partly nationalised. The Royal Bank of Scotland Group, at its peak the fifth-largest bank in the world by market capitalisation, was effectively nationalised in October 2008. By mid-2009, HM Treasury had a 70.33% controlling shareholding in RBS, and a 43% shareholding, through the UK Financial Investments Limited, in Lloyds Banking Group. The Great Recession, as it came to be known, saw unemployment rise from just over 1.6 million in January 2008 to nearly 2.5 million by October 2009.
  
  In August 2008 the IMF warned that the country's outlook had worsened due to a twin shock: financial turmoil and rising commodity prices. Both developments harmed the UK more than most developed countries, as it obtained revenue from exporting financial services while running deficits in goods and commodities, including food. In 2007, the UK had the world's third largest current account deficit, due mainly to a large deficit in manufactured goods. In May 2008, the IMF advised the UK government to broaden the scope of fiscal policy to promote external balance. The UK's output per hour worked was on a par with the average for the "old" EU-15 countries.
  
  In May 1997, Labour, led by Tony Blair, won the general election following 18 years of Conservative government. The Labour Government inherited a strong economy with low inflation, falling unemployment, and a current account surplus. Blair ran on a platform of New Labour which was characterised largely by the continuation of neo-liberal economic policies, but also supporting a strong welfare state. In Britain it was largely viewed as a combination of socialist and capitalist policies, being dubbed ' Third Way '. Four days after the election, Gordon Brown, the new Chancellor of the Exchequer, gave the Bank of England the freedom to control monetary policy, which until then had been directed by the government.
  
  During Blair's 10 years in office there were 40 successive quarters of economic growth, lasting until the second quarter of 2008. GDP growth, which had briefly reached 4% per year in the early 1990s, gently declining thereafter, was relatively anaemic compared to prior decades, such as the 6.5% per year peak in the early 1970s, although growth was smoother and more consistent. Annual growth rates averaged 2.68% between 1992 and 2007, with the finance sector accounting for a greater part than previously. The period saw one of the highest GDP growth rates of any developed economy and the strongest of any European nation. At the same time, household debt rose from £420 billion in 1994 to £1 trillion in 2004 and £1.46 trillion in 2008 – more than the entire GDP of the UK.
  
  This extended period of growth ended in Q2 of 2008 when the United Kingdom entered the Great Recession brought about by the 2008 financial crisis. The UK was particularly vulnerable to the crisis because its financial sector was the most highly leveraged of any major economy. Beginning with the collapse of Northern Rock, which was taken into public ownership in February 2008, other banks had to be partly nationalised. The Royal Bank of Scotland Group, at its peak the fifth-largest bank in the world by market capitalisation, was effectively nationalised in October 2008. By mid-2009, HM Treasury had a 70.33% controlling shareholding in RBS, and a 43% shareholding, through the UK Financial Investments Limited, in Lloyds Banking Group. The Great Recession, as it came to be known, saw unemployment rise from just over 1.6 million in January 2008 to nearly 2.5 million by October 2009.
  
  In August 2008 the IMF warned that the country's outlook had worsened due to a twin shock: financial turmoil and rising commodity prices. Both developments harmed the UK more than most developed countries, as it obtained revenue from exporting financial services while running deficits in goods and commodities, including food. In 2007, the UK had the world's third largest current account deficit, due mainly to a large deficit in manufactured goods. In May 2008, the IMF advised the UK government to broaden the scope of fiscal policy to promote external balance. The UK's output per hour worked was on a par with the average for the "old" EU-15 countries.