Sunday, 6 March 2011

How shocking is this?

This week sees the anniversary of the END of the Three-Day Week.

It was 37 years ago, which may not seem much of an anniversary. However, the comparison between now and then seems to become more pertinent by the day.

Recall for a minute how things looked in 1974. What had people been through?

The Barber Boom
The Secondary Banking Crisis
A weak pound and inflation
The Oil Shock after the Yom Kippur War

Now reflect on what we have seen and are seeing...

The Brown Boom
Our Banking Crisis, a primary one
A devaluation and inflation
A new Oil Shock after political turmoil in North Africa.

We don't know how serious or long-lasting this spike in oil prices will be. However it's worth remembering the scale of the changes back in the early seventies.

The price of oil quadrupled between 1973 and 1974.
The price of petrol was on the way to doubling, between 1972 and 1975.
Inflation was 17% and rising to 24% in 1975.

This time around the oil price has jumped by 64% in less than a year.
Over the same period the price of a litre of unleaded has risen by about 18%.
Inflation, at 5%, is much lower than in the early 1970s though it is running well ahead of wage increases.

So on the face of it there was more shock value in the 1973-4 problems and more to worry about. With hindsight we know that the trouble extended through the decade.

It was fun for schoolchildren like me, even so. I remember the power cuts and the candles, as well as the fury from teachers if a light was left on in a classroom. There were shortages of essentials, such as loo paper.

The Three-Day Week was the result of the Heath government's dispute with the miners. When Heath reached a dead end he asked voters for their verdict: the result was a Labour administration and a settlement with the unions.

You could say, I suppose, that the anniversary of the end of that painful episode shows that things do start to get better, eventually.

But looking back, another thing stands out. Pressures were building up well before the 1973 oil crisis. Prices of commodities other than fuel rose by 70% between 1971 and 1973.

Food prices doubled.

More uncanny similarities with the present day? Maybe it will take longer to get out of this than we think.

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