35 years ago the UK was also in the depths of a downturn, caused by the oil price rise and global recession; plus the collapse of property and stock market bubbles.

This made for a slow and uncertain recovery:

• Per capita GDP growth averaged 2.5% in 1976-79
• Sterling crisis forced UK to go to IMF in 1976
• Unemployment remained high throughout late 1970’s (“high” by historic standards – at 5% it was low by modern standards)

Harold Wilson’s Labour Government made a last ditch attempt to maintain the post 1945 neo-Keynesian consensus through:

• “Social contract” with trade unions
• Wage and price restraint
• Government intervention to support faltering industries

The effects on the society of the time were to stall the aspiration for progress which had grown over previous years – Gallup Poll surveys tracked the decline of economic confidence compared to 1960’s. A 1977 survey by New Society found that a clear majority wanted to work “only as much as necessary”, and to have “a pleasant life” – most were content with their current income level.

Following the recession, the period 1976-79 was one of on-going economic weakness and uncertainty which did not favour UK business, despite its recent EU membership:

• Weakness of public services (eg. NHS)
• Potential of computers and other electronics
• Continuation of social aspiration trends of 1960’s (home of one’s own, new experiences, self-expression)

Key growth markets and industries in the late 1970s:

NATURAL RESOURCES
North Sea oil and gas

EU EFFECT
Imported cars
Wine

ELECTRONICS
Computers and electronics

PUBLIC SERVICE WEAKNESS
Private medical insurance

ASPIRATION
Foreign holidays
Foreign restaurants
DIY (based on increasing home ownership)

OTHER
Commercial radio

More importantly for marketers, innovation in FMCG, as recorded by Supermarketing magazine’s annual survey of grocery buyers, demonstrated a slightly delayed response to recession (austerity lines introduced in 1975), followed by progressive recovery and the re-assertion of underlying trends such as snacking and slimming. Some major product launches following recession:

So onto our recession scorecard for 1974-75:

Pros:

• Employment maintained at relatively high level

Cons:

• Limited energising effect on ‘UK Plc’
• Weak response to economic challenges and opportunities

In the next post we go forward in time to the eighties to see how the next decade’s recession would treat the UK.