In the run-up to his big speech yesterday, all the talk was of the Prime Minister promising a ‘Rooseveltian’ New Deal for Britain. Fortunately, when it came to it, he wasn’t promising anything of the sort. Why fortunately? A tale of two countries provides the answer.

Despite all the hardship that was endured (especially in the north-east, Wales and Scotland) the UK had a relatively good Great Depression by international standards. There was an extremely conservative fiscal policy (much more so than during the so-called austerity after 2008) and yet the economy bounced back. In the period 1930-1933, the average public sector deficit was just 1.1% of GDP. And there were only two years of negative GDP growth (1930 and 1931). By 1938, GDP growth had been sufficiently rapid, that the country had returned to trend national income as if the Great Depression had never happened.

A major driver of growth in this period was private sector house building. To put it in context, last year housebuilding was at a 30-year high and we built three houses for every thousand people. In the mid-1930s, according to Nick Crafts, the rate of building was more than twice as high. A major cause of this was a liberalised market. Only a small part of the country was subject to planning controls. In the UK, we had a stable regulatory environment, a liberalised market for land for building purposes and fiscal austerity.