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COMMENT
Who's been Britain's best prime minister? Churchill? Macmillan? Thatcher? Or Blair? In terms of annualised stock market performance during their time at Number 10, the most successful PM since 1945 has been... James Callaghan.
Prime Minister
Time in office
Overall market
return (%)Annualised
return (%)
Clement Attlee
July 1945 - October 1951
17
3
Sir Winston Churchill
October 1951 - April 1955
28
6
Anthony Eden
April 1955 - January 1957
2
1
Harold Macmillan
January 1957 - October 1963
81
9
Sir Alec Douglas-Home
October 1963 - October 1964
12
12
Harold Wilson
October 1964 - June 1970
13
3
Edward Heath
June 1970 - February 1974
24
6
Harold Wilson
February 1974 - April 1976
10
4
James Callaghan
April 1976 - May 1979
71
19
Margaret Thatcher
May 1979 - November 1990
271
12
John Major
November 1990 - May 1997
106
12
Tony Blair
May 1997 - to date
13
2
(All statistics extracted/estimated from The Stock Market: 50 Years Of Capitalism At Work and Bloomberg. Market performances up to 1964 are based on the FT 30 index. Market performances after 1964 are based on the FTSE All-Share index.)
Harold Wilson's surprise resignation in 1976 allowed James Callaghan to benefit from the recovery that followed the 1973-74 oil crisis and recession. During Callaghan's three-year stint as PM, the economy and sterling was stabilised (with the help of the International Monetary Fund) and government coffers began to benefit from North Sea oil. Indeed, between November 1976 and October 1977, Callaghan's government lowered interest rates from 15% to 5% -- an eleven-month period which saw shares almost double.
Inflation did however affect the returns earned during Callaghan's regime. In real terms, equities gained only 22% between April 1976 and May 1979. In fact, inflation ravaged the returns experienced during many different leaderships; the market effectively lost 8% during Clement Attlee time in power, 13% during Wilson's first term in office, 11% during Ted Heath's government and 27% during Wilson's second stint.
In terms of sustained, long-term gains, Margaret Thatcher's eleven years as prime minister is unsurpassed. A raft of political and economic reforms thrust the market almost four-fold between 1979 and 1990. Incredibly, investors never witnessed a calendar year when the market lost ground during her time in office. John Major continued the momentum until 1997, with the market then going onto to double in less than seven years.
Finally, how have shareholders fared under current PM Tony Blair? Eight years since entering Number 10, investors have seen their shares on average grow by 13%, or minus 9% after inflation. If he gets re-elected on Thursday and remains in charge until 2010, Blair will need the FTSE All-Share to breach 20,500 if he wants to match Callaghan's record and oversee 19% per annum returns for investors.