ABSTRACT
One can divide the period of the operation of the new approach into four distinct phases, although precise dating is not possible. In the first phase, from May 1971, the accent was on easy credit in order to trv to reduce unemployment. This lasted until the sterling crisis of June 1972. From June 1972 until October 1972 there was an interim phase while the authorities reviewed the position. From October 1972 onwards, they ‘willed the end but feared the means’, and tried to control credit and money without increasing interest rates. In July 1973 the authorities accepted the consequences of their own system and raised Minimum Lending Rate (MLR) by 4 per cent in two weeks, to an unprecedented 11½ per cent. From July to December 1973 the competition and credit control regime was operated in something like its intended fashion, but in December the new approach was replaced by a new ‘new approach’. This new regime and its workings are discussed in Chapter 8. In this chapter the four phases are examined in turn.
