Tuesday, August 12, 2008

1991 and all that.

What do Freddie Mercury, The Birmingham Six, Terry Waite and Bob Maxwell have in common? Well it was 1991 that they were the faces in the news; and while they were on our TV screens (Terry Waite and the Birmingham Six were released while Maxwell and Mercury died that year) we were listening to Chesney Hawkes, Bryan Adams and Jason Donovan and watching Silence of the Lambs, Terminator 2 and Beauty and the Beast at the cinema; the Gulf war was in full swing and John Major was abolishing the Poll Tax and launching his Citizens Charter.

What is the relevance of remembering the events of seventeen years ago? Why have I dredged up these pointless facts?

Because 1991 is the last time in the UK when inflation stood at 4.4% - but unlike July 2008 in 1991 inflation was falling - fast; you have to go back much further, to the 1980's to find the last time inflation hit 4.4% on it's way up- and this had to be followed with 11% interest rates before the 1991 falls began to happen.

It wasn't enough to head off a massive property slump and economic recession which lasted through until the 'green shoots of recovery' finally arrived in 1994; by which time inflation had all but disappeared.

Today we are in a situation where inflation is rising and hit 4.4% last month when we all know that there is much more pain in the system yet to feed through to the figures; food fuel and water charges are up 20% or more and the headline rate seems destined to breach at least 5% before this run is over.

Gordon Brown has lost control of our economy and claiming that the global credit crunch is to blame won't wash - on the same day as our shocking figures the French announced a slight drop in their inflation rate and trhroughout the rest of the developed world inflation is lower than here; and under control.

There are a generation of business people and decision makers out there who have never had to deal with inflation; never had to cope with their company profits shrinking in real terms even when the figures go up; there are senior civil servants and business leaders who were still in university the last time our economy faced these kinds of stresses. How will they react?

And then there are a whole new generation of puzzled households finding that their living standards are visibly deteriorating even as their earnings rise ; because taxes and prices are rising even faster.

It took nearly 20 hard years to squeeze out the endemic inflation that had plagued the British economy since the 1960's. I honestly believed that policy makers and politicians had learned the mistakes of the past, and having eradicated the desease we could get used to life without it; sadly I hadn't factored in Gordon Brown.


Anonymous said...

How are these untested and 'green' business people, civil servants and politicians coping? They're insisting that the government needs to bail us all out, rather than taking responsibility and getting on with it themselves. Over the last decade, this country has bred a bunch of complete idiots, ninnies and metaphorical bedwetters, interested only in David Beckham's pants and who's sleeping with whom in the soaps. God help us all.

Man on the Paignton Omnibus said...

I wholeheartedly agree with this. My fathers generation fought their enemies till death or glory in WW11; my generation overcame the Soviet threat, the IRA and Communist trade union leaders intent on destroying our country. We repaired the British economy and restored our status as a leading world power during the 1980's; whereas this generation seem intent on turning this country into a nanny state where the entire population are unable to do anything on their own and seem content to sit and wait for the next hand-out; meanwhile returning us to the state of the sick man of Europe.

It's tragic to behold.