It was curiously appropriate that Tony Blair and Gordon Brown should be celebrating their success in achieving the longest-ever unbroken period of Labour government, just as a clutch of alarmist stories broke about record rises in consumer credit and a "national borrowing binge". For those stories captured the essence of what the economy under New Labour has been all about.
Despite endless rhetoric about "prudence" and "caution", "stability" and "the end of boom and bust", the truth is that economic growth since 1997 has been driven overwhelmingly by consumer spending, fuelled by a massive rise in consumer debt. Consumer spending has grown more rapidly than the economy every single year New Labour has been in power, as the first chart shows. Contrary to every impression given, our "Iron Chancellor" has been content to be pulled along in the wake of the most extended consumer boom in British economic history.
This is not to say that disaster is just around the corner. The £2.2bn rise in consumer credit in June and the £10bn rise in total consumer borrowing were both records, leading John McFall, chairman of the Commons Treasury Select Committee, to talk of "some people tip-toeing into disaster". But interest rates are also low, so that households' debt servicing costs, as a percentage of their disposable income, are no higher now - at about 7 per cent - than the average for the past 10 years. Banks report mortgage arrears and bad debts at record lows. The Bank of England is probably right to expect a soft landing rather than a crash.
However the end comes, there can be little doubt that, following this latest episode of consumer exuberance, it cannot be far off. Real earnings growth is in decline. After-tax pay has been hit by increased national insurance contributions, so that in the year to April average take-home pay fell by 1.3 per cent. The house-price boom is subsiding as the number of transactions falls - which can be expected to have knock-on effects for consumer borrowing and spending. Unemployment is edging upwards, and interest rates may be near the trough of the current cycle. The great consumer boom is almost spent. The uncomfortable question for Mr Brown is, what happens next?
The Chancellor's hope is that investment and exports will rise to help public spending take up the slack. But with our main export markets in Europe scarcely growing at all, and the response of exporters to the recent devaluation of the pound negligible, the betting has to be that other types of expenditure will not pick up strongly enough to counteract the gradual but relentless slowdown in consumer spending now in prospect. In this case, the economy will grow well below potential for some time, leading to a series of familiar difficulties - not least a ballooning budget deficit as tax revenues decline, and associated pressures for spending cuts or tax rises. The odds are shortening on this Chancellor's going the way of all the rest.
Which would be a pity, because it wasn't meant to be like this. Back in 1997, the New Labour economic programme was all about investment. The British economy, it said, suffered from decades of under-investment and the urgent need was to change priorities after the candy-floss years of the irresponsible Conservatives and build an "investment society". Mr Brown returned to the theme after the last election, when he declared that, having restored stability, the central challenge now was to address the fundamental weakness of the economy and close the productivity gap with our principal competitors.
Admirable sentiments. But what happened? The first chart shows that investment crashed during the Labour years - shrinking spectacularly last year and scarcely growing this. With the balance of payments in heavy deficit, continued reliance on consumers (including, latterly, public sector consumers) to keep the economy going was total. It is not just that little progress has been made towards turning Britain into an investment society - under New Labour, we have gone backwards.
All this is deeply disappointing because Mr Brown's original diagnosis was perfectly correct. There is a big gap in economic efficiency between the UK and its main competitors, much of which is connected with lack of investment, and it needs to be addressed if Britain's long-term economic performance is to improve. It may come as a shock to those who have taken at face value the claims of successive governments that they are living in the most successful and dynamic economy in Europe, but levels of efficiency are in fact substantially higher in France and Germany, as well as in America, than they are here.
The current position is illustrated in the second chart, reproduced from a research paper commissioned by the Department of Trade and Industry from Professor Michael Porter of Harvard. This shows that productivity (output per hour worked) in Germany and France is about 20 per cent higher than the UK level, and in America about 40 per cent higher.
In terms of the general level of prosperity (output per head of population), Britain has largely drawn level with France and Germany. But this is because British people have been working longer hours while those on the Continent have been working less - longer hours have meant that output per person employed has been rising faster here than on the Continent.
At the same time, the participation ratio, the proportion of the population going to work, has also been growing here. In short, we have kept up, despite relatively low levels of productivity, by more and more of us working harder and harder. It can't go on - which is why Mr Brown has described raising productivity levels as Britain's greatest challenge.
Why does productivity in the UK lag behind? The second chart gives the answers. Compared with France and Germany, Britain lags behind mainly because it employs less capital per worker (and to a degree because, especially in relation to Germany, its labour force skills are inferior). This is also part of the explanation for the productivity gap with America - although their productivity has also been enhanced by a superior rate of innovation (total factor productivity). The figures are dramatic. The amount of capital per hour worked is 25 per cent lower in the UK than in America, 32 per cent less than in Germany and an extraordinary 60 per cent less than in France. It's no wonder people have to work so hard in Britain when they are backed by so little investment.
These figures demonstrate clearly that the agenda of relatively low taxation and regulation, vigorous competition, and flexible, largely deunionised job markets, which was pursued by Margaret Thatcher and John Major, and subsequently adopted by Messrs Blair and Brown, has now largely run its course without much visible sign of the efficiency gap with Britain's main competitors being closed. Sadly, New Labour has not been any more successful than the Conservatives in raising Britain's underlying economic performance, and, as so many times in the past, only the strength and duration of a consumer boom has hidden this uncomfortable truth from public view.
Christopher Smallwood is the Economic Adviser to Barclays. This column is a personal view.
Stephen King is on holiday.