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They used, when I first came in, to talk about us in terms of the British disease. Now they talk about us and say, "Look, Britain has got the cure. Come to Britain to see how Britain has done it." That is an enormous turn-around. (Margaret Thatcher, Financial Times, 15 February 1988)
Government should have a role that is enabling: supporting small businesses, encouraging technological advance; investing in science; above all, promoting competition and removing the barriers to business growth ... I call it a Third Way ... Supporting wealth creation. Tackling vested interests. Using market mechanisms. (Tony Blair, speech at World Economic Forum, Davos, Switzerland, 18 January 2000)For the past two decades, British economic reforms have been motivated by a desire to increase the reliance on market forces relative to the role of the state in the determination of prices and the allocation of resources. Thatcher's Conservative government privatized industries and council housing, enacted laws to weaken trade unions, created financial incentives for workers to choose private pensions, and reduced the benefits available to unemployed workers--all the while preserving national health insurance and other features of the welfare state. The subsequent Major government pursued a similar agenda, abolishing the Wages Councils and privatizing many of the remaining state-owned enterprises. In the late 1990s, Blair's New Labour government continued to introduce market-enhancing reforms. It created tax breaks for employee share-ownership programs, opposed EU directives that business interpreted as antibusiness, and enhanced the work incentives of the income support system. In the realm of monetary policy, the Labour Party went beyond the Tories by shifting in-terest-rate-setting authority from the Treasury to an independent Monetary Policy committee. While there are some exceptions--the Thatcher campaign to centralize public-sector decision making and limit the independence of local government, and the Blair eﬀorts to ease the formation of unions and introduce a national minimum wage--the main goal of the U.K. policy reforms has been to reduce the economic role of the state and enhance the role of markets in determining economic outcomes.