A Second Take On The Last Double-Dip
The UK's last double dip recession was so different to the one we are now enduring.
Back in January 1974 I vividly remember listening to the broadcaster John Timpson on the Today programme in his rather crusty manner, in my damp Islington basement flat, informing Willie Whitelaw that the country would be much obliged if he could convene a meeting with Joe Gormley and Lawrence Daly of the National Union of Mineworkers at his earliest convenience.
He blasted that the 3-day week was becoming more than irritation, as the country sat for hours every day in darkness, whilst the UK's economy hung in rags, with GDP falling by 3.9% and inflation raging at 20%.
Oil at that time had reached gargantuan level of $5.11 a barrel, which represented a 70% increase since October 1973!
At that time the world's economy suffered at the hand of rampant inflation and high unemployment.
Unemployment in the US was 9%, but it was not until the Reagan administration that unemployment really increased.
In 1974 unemployment reached 1.5 million in the UK - my word how we would settle for that today!
It was not until just after the 1979 election that unemployment in the UK reached 3 million after years of austerity imposed by the IMF, when Jim Callaghan was PM and Denis Healey was Chancellor.
Mr Healey took over the reins from Anthony Barber, who is perceived by many to have been one of the most incompetent Chancellors in living memory.
In January 1973 interest rates were 7.5% with inflation standing at 20%+.
They reached 13% in November, but by then the horse had bolted! It was too late.
Several personal reflections come to mind during those dark days.
There was a wage freeze.
To get an increase required promotion or moving job.
I had just started a money broking operation and in comparison to many others I was very well paid - £12,000 a year, but tax at 83% was paid on much of it!
It was not until 1986 that income tax fell to 40%.
You would have been forgiven for thinking that 1973 was a daft time to set up a business, as the stock market fell 45% from January to November 1973!
Ironically it wasn't, as at that time in the City banks were opening branches in London in their droves to accommodate the expanding euro Dollar market. By the end of the decade there were 300!
Today there are about 60.
In November 1973 we saw Midland Bank and Lloyds Bank shares drop below their £1 nominal value to 88p.
This was the moment of truth - anarchy or time to buy? The rest was history until 2008!