After 1974-5, it wasn’t long before the UK found itself in another economic downturn at the start of the eighties. Once again the combination of Oil price rises and global slowdown caused recession.
This time it took the form of a period of intense pain followed by strong rebound:
- Manufacturing production declines 15% in 1979-83
- Unemployment rises to a peak of 11% in 1986, declining rapidly thereafter
- Growth of GDP per capita averages nearly 4% in 1985-88
However a very different set of politicans were at the helm. Margaret Thatcher’s government focused on enterprise culture and the replacement of the post-war consensus:
- Market as key driver
- Privatisation and deregulation
- Individual enterprise
- Reduced role of state (and unions)
Thatcher memorably said that “there is no such thing as society”. Certainly the society was changing, with the emergence of ‘Yuppies’ widening the gap from a growing ‘underclass’. In 1986 a Gallup Poll found that 10% gave “getting rich” as their main goal in life. A report on Social Trends in 1988 cited that “inflation and unemployment are seen as ever present threats; a sizable minority from the lowest income groups were sceptical that any general improvements in the economy would benefit them”.
However the latter part of the 1980’s were favourable to UK business: the unions were tamed, the workforce was energised by the “cold bath” of 1980-81, deregulation gave business its head, and government coffers were bolstered by tax incomes from North Sea oil.
Key growth markets and industries in the late 1980s:
North Sea oil
Computers, office machines, telecommunications equipment
Business services (eg. Management consultants)
Science parks and industrial parks
Premium consumer goods (eg. Beer, cars)
Discount grocers (eg. Kwiksave)
Sports equipment (eg. Running shoes)
Innovation in FMCG was focused around austerity,value, and relatively simple offers in 1980/81; thereafter there was a rapid reversion towards fundamental drivers such as convenience, snacking, new technology and affordable aspiration, while health became an important concern. By 1986/87 aspirational lifestyle had re-emerged as a strong force.
So having revisited the eighties, let’s return to our recession scorecard:
Energising of UK Plc
Strong response to opportunities
Robust innovation in FMCG
Loss of output as a result of substantial unemployment
Disenfranchised “underclass” make limited contribution to economy and society
Next time we’ll look at the recession which followed a decade later in 1990-91.