In 1981, Geoffrey Howe defied Keynesian orthodoxy by tightening fiscal policy during a recession – and completely changed the narrative about the British economy. Reeves must do the same, but all she offers is doom and gloom, says Paul Ormerod

The UK economy is either already in or very close to a recession. Despite Rachel Reeves’s proclamations about the importance of growth, it remains elusive. What is to be done?

Very few budgets linger in the memory for very long. But one which does is the March 1981 budget introduced by Geoffrey Howe, Mrs Thatcher’s first Chancellor.

The economy was unequivocally in a recession, the sharpest there had been since the Second World War. Output had begun to fall in the spring of 1980 and by March 1981 it was over four per cent lower than a year previously.

The striking feature of the budget was that, at a time of severe recession, the government tightened fiscal policy. The overall effect was a cut in borrowing of around 1.5 per cent of GDP –........

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