ABSTRACT
The 1970s were a decade of tumult, doubt and discontent. Violent changes took place in economic activity, in government policy and in the ideas by which policy was guided. Inflation took hold and reached a rate that frightened even the trade unions. Wages outstripped prices and at one stage rose in a year by nearly one-third. Unemployment rose from 600,000 in 1970 to 1.5 million in 1980 but ceased to be the touchstone of policy as the need to control inflation took precedence over the earlier aim of full employment. The rate of exchange was allowed to float in June 1972 and fluctuated violently, with a drop of 8 cents in a single day in 1976. The effective exchange rate fell by 40 per cent between 1972 and 1976 and then recovered about half the fall by 1980. For three years in the middle of the decade consumers’ expenditure fell and for two of these years GDP fell too-experiences without precedent in the years since 1945. Yet the record of the decade was not so black as is sometimes suggested. The increase in GDP (thanks in part to North Sea oil) was not far short of the increase in the 1960s and a good deal greater than in the 1950s. Consumer spending rose by more than in the 1960s; it was capital investment, not consumption, that suffered.
