What was so special about the 1980s recession?

the_ash_and_the_oak

penguine wrote: »

Found another article (though not very detailed) summarising the 8 recessions since 1945. In terms of unemployment we have already surpassed the 1980s recession (approx 1 million) and 1990s recession (almost 2 million).

www.telegraph.co.uk/finance/financetopics/recession/4320908/UK-recession-How-does-this-one-compare-to-those-since-1945.html

Does anyone know how these figures compare in terms of percentage of UK population though?

Interesting that we've passed prev ones already - but don't we calculate differently now? and also we have larger numbers in further education

vivatifosi

vivatifosi wrote: »

There's a pretty good timeline of events for the early 80s recession at bized:

http://www.bized.co.uk/dataserv/chron/kf80.htm

Sorry to quote my own post, but here are the time lines for the seventies and nineties, so you can compare:

1970s: http://www.bized.co.uk/dataserv/chron/kf70.htm
1990s: http://www.bized.co.uk/dataserv/chron/kf90all.htm (long)

Graham_Devon

People were comparing the 90's recession. But now compare the 70/80's recession as things got worse than the 90's.

Many more of the economists however are now comparing the 30's depression.

Why do people compare with different ones? Well, depends what they want to make a point about. Every recession is relative to todays, we can afterall only go on history.

So in my mind at least, if you want to compare house prices, the 80's is a good one to suggest house prices won't crash much or very long.

But if you compare the 90's one, this suggest different. And the 30's one suggests different again.

So it really does, in my mind, depend on what you are trying to back up your thoughts with as to which one you choose. And we are all guilty of it

StevieJ

vivatifosi wrote: »

Sorry to quote my own post, but here are the time lines for the seventies and nineties, so you can compare:

1970s: http://www.bized.co.uk/dataserv/chron/kf70.htm
1990s: http://www.bized.co.uk/dataserv/chron/kf90all.htm (long)

What a shambles :rotfl::rotfl::rotfl: And they call Brown
1974 - 1975 Crisis: 4-fold price rise for oil, miners' strike, 3 day week, political vacillation. Balance of payments current account deficit of £3.5 billion in 74,, and the effective exchange rate index falls from 83 to 73. Stagflation hits the world, then Britain. Real GDP falls, unemployment almost doubles, and inflation reaches record heights (24% in '75).
'Try everything' policy: PSBR rises to 11.5% of GDP; money is controlled and grows by less than 10%. Pay policy from August '75, for 3 years. Support from the IMF for our almost-exhausted reserves at the end of '76, following a collapse of the £ to only 60% of its '71 value.

mewbie_2

Joeskeppi wrote: »

People must be slowly grasping that comparing with any previous recession is meaningless, countless factors are different.

I haven't grasped it yet.

StevieJ

Graham_Devon wrote: »

People were comparing the 90's recession. But now compare the 70/80's recession as things got worse than the 90's.

Many more of the economists however are now comparing the 30's depression.

Why do people compare with different ones? Well, depends what they want to make a point about. Every recession is relative to todays, we can afterall only go on history.

So in my mind at least, if you want to compare house prices, the 80's is a good one to suggest house prices won't crash much or very long.

But if you compare the 90's one, this suggest different. And the 30's one suggests different again.

So it really does, in my mind, depend on what you are trying to back up your thoughts with as to which one you choose. And we are all guilty of it

No comparisons, as I pointed out before, monetary policy is the loosest since the Bank of England was formed.

tomterm8

penguine wrote: »

I've noticed more comments on this board lately about the 1980s recession, about how we ought to be comparing this one to the 1980s instead of to the 1990s. I don't really remember either (I came to the UK in 1998) so was wondering if anyone could explain the causes and main features of those two recessions and why this might be more similar to one or the other?

Really, you compare the size of a recession by the peak-to-trough percentage contraction in GDP.the contraction in 1990 was around 2.5% IIRC, in 1981 it was around 4.6%; whereas so far we are looking at around 3.7% (I haven't got my statistics with me, so you'll have to take these figures with a pinch of salt). If we have another quarter like last quarter, it would be worse than the 1980's... for what it's worth, I think this quarter might post a much smaller decline than last quarter.

It's fair to say, the 1980's recession was the worst in living memory. Large sections of british industry were completly destroyed. The 1970's recession may have been worse than 1980's, but it was a "double dip" where a period of recession was followed by a "recovery" and then another recession a few quarters later.

Graham_Devon

tomterm8 wrote: »

It's fair to say, the 1980's recession was the worst in living memory. Large sections of british industry were completly destroyed. The 1970's recession may have been worse than 1980's, but it was a "double dip" where a period of recession was followed by a "recovery" and then another recession a few quarters later.

I think this one will be the same. Double dip.

Entertainer

The early 80's recession was deeper in this country in terms of GDP drop than the early 90's and was the deepest since the 1930s. We lost about 1/6th of our manufacturing during it. Interestingly though, about half of all the job losses took place in 4% of companies whereas 25% of companies actually increased their workforce, seeming to indicate that there was a hardcore of lame duck companies which had developed in Britain as we slowly lost our competitive edge over the previous 30 years.

In this recession, drop in GDP will exceed the early 80's when this current quarter's figures come out and will indeed be the deepest since the 1930's. Manufacturing is currently declining at the mind blowing rate of 25% a year which is also faster than anything since the 30's. This is a manufacturing sector that is already very much more lean and efficient than it was previously. In addition, we also have the entire banking industry insolvent and being rescued by the government, costing at least £100 billion, which did not happen in the 80's.

For government debt- it peaked at 45% of GDP after the early 80's and fell to 30% by the end of the decade, whereas now it will be up to 80% within three years and this is on an optimistic assessment- it could well be higher. These are obviously colossal figures and it looks like it could be 40 years to get it back down to 40% of GDP, if ever. This is the largest since WW2, when we at least had the excuse of fighting (alone at one point) the greatest evil in the history of mankind in the Nazis to justify the expense. As opposed to this time, which has been about keeping Anthea Turner and Grant Bovey in chateaus- how fitting.

Finally, previous recessions had some logic to them as to why they were happening. In the early 80's you had hyperinflation from the 70's and the strict monetary policy of high interest rates from Paul Volcker at the Fed and Geoffrey Howe in this country, in order to (successfully) cure stagflation. By contrast, this recession was 100% avoidable, unnecessary and predicted by many. It reflected the very worst of human nature- stupidity (Bush, Blair), hubris (Brown) and greed (bankers, property spivs).

So we have:

The biggest drop in GDP since the 1930's.
The biggest National Debt since WW2.
A recession that was totally avoidable.

I would say that's worse than the early 80's.

amcluesent

>seeming to indicate that there was a hardcore of lame duck companies<

This time, it looks to be companies whose existence relied on fancy financing and 'leverage' that will be blown away by margin calls for a while yet. Same with families who MEWed to the hilt.

Years of grinding austerity lie ahead. Clown's 2009 budget was a work of pure fiction that failed to tackle any of the systemic problems. He'll be happy to leave a "scorched earth" for the Tories.