Economic Depression – one more for the road eh?

Coronavirus could lead to an Economic Depression on a scale not seen since the 1930s – according to the International Monetary Fund. We’re already seeing people going without food and being kicked out of work. And when the virus subsides, it’s not going to be a return to business as usual. The damage that’s been done is way too severe.

Millennials experienced the 2008 crisis as a brutal coming of age. A long, deep recession that trashed people’s life chances. For Boomers, I’m losing count how many economic recessions we’ve been through now. Sterling crisis of the 1960s. Oil crisis of the 1970s. Manufacturing collapse under Margaret Thatcher. Housing market collapse in the early 1990s. And here we go again!

Only this time it will be very different. It’ll be way more catastrophic in terms of the impact on jobs and markets. And of course it’s happened not because of economic cycles or government policy but – a biological virus. You’d surely have to go back to the Black Death of the fourteenth century to see a disease hit our economy at such a scale.

As Boomers, we’ve seen economic recessions with very different characteristics. The 1970s saw short bursts of recession that despite the reputation of the decade for crisis and gloom, actually saw the economy bounce back into positive growth pretty quickly. The psychological impact though was huge because we’d basically been booming since the end of the Second World War and suddenly, we experienced a taste of what our grandparents had lived through in the 1930s.

The cause of recession in 1973 was the decision by oil producing countries to quadruple the price of ‘black gold’. Basically, they weaponised oil and were punishing the UK, US and other nations for supporting Israel in the Yom Kippur War. I remember the news bulletins were always relaying the latest bad news from the meetings of Arab oil producers. And Sheikh Yamani – the Saudi oil minister – became a household name. Here he is blithely informing us that oil is now a weapon…

Sheikh Yamani was a household name

1979 saw Margaret Thatcher become Prime Minister in the UK and she implemented what was called a “monetarist” policy in the face of an economic downturn. That meant Austerity-Max with public spending cut and state support to manufacturing industry reduced. What Thatcher wanted to do was break the trades unions, reduce inflation and privatise the state-run parts of the economy. So, a political agenda as much as an economic policy.

The result between 1979 and 1981 was benign if you lived in the south east. But in Scotland, the north and the Midlands of England – industries collapsed like dominoes. I went on a canal trip at the end of secondary school on the Cheshire Ring canal and we were gobsmacked as middle class southern kids to see mile after mile of closed factories. It was a scene of devastation that led to a summer of riots in cities across the UK in 1981.

Thatcher remained in power until 1990 – when she oversaw another, often forgotten, recession. Like 1979 to 1981, the recovery took way longer than the downturns of the 1970s. We’d had the yuppie boom of the late 80s when markets soared. But then 1987 saw a stock market crash on Black Monday with the FTSE falling nearly a quarter in two days. Two years later, the aftershock hit the ‘real economy’ with unemployment rising sharply all over the country.

What I recall the most about the early 90s recession was the collapse in house prices. There were a lot of what were termed ‘voluntary repossessions’ where people chucked their own keys through the letterbox and walked away from their own home. And there was a boom in auctions of empty properties.

I was a financial journalist at the time and the other thing I reported on was the massive amount of financial corruption that was exposed as the economy slowed down. From Lloyd’s of London to independent financial advisers on the high street – the reality of the 1980s Yuppie era revealed itself in one scandal after another.

Back to the 1979 to 1981 recession. Here is the Toxteth riot of 1981 – what happens when you let youth unemployment skyrocket…

Appearing on BBC Question Time in 1980

1980 television

In 1979, the BBC launched a new political discussion show called Question Time – presented by Sir Robin Day. Somehow, a friend of mine got tickets to be in the audience and so, aged 16, we went along to the studio. Robin Day was elsewhere that day and the programme was hosted by the veteran Canadian broadcaster Bob McKenzie.

At that time, I’d started to get involved in left-wing politics and had developed a curious and unconvincing cockney accent – ditching the cut-glass posh voice my mother had instilled in me. I also still had the Irish Republican convictions that my Irish Republican grandmother had indoctrinated me with from an early age. I later became a lot more nuanced on that issue.

During the show, I stuck my hand up and got to make a point about the vote being taken away from Irish citizens living in the United Kingdom. This was a typical piece of Margaret Thatcher spite aimed at Irish people.

Me on Question Time in 1980

The British Nationality Act (passed in 1981) was being discussed in parliament and she was clearly keen on trimming the rights of Irish citizens in the United Kingdom. Subsequent analysis has suggested she thought they all voted Labour and so needed to be disenfranchised. Being half-Irish – I was not impressed.

Anyway, with my newly found cockney accent, I made my contribution and was roundly put down by Bob McKenzie. Should mention that the poor man died a year later. I hope the stress caused by my angry teenage words didn’t contribute to his demise!