The 1970s saw inflation and interest rates skyrocket to levels not seen since the Second World War – but was it worse than today’s economic crisis? Phil Tinline investigates
The one moment since 1945 when inflation rose to really frightening heights was the period in the mid-1970s, when it reached 25 per cent – the highest in British history since the Second World War.
The most significant fear this triggered was among those who blamed striking unions. In summer 1974, Sir Walter Walker, a retired British Army general, gathered his many scared, angry middle-class supporters into a volunteer group ready to maintain essential services and face down the expected general strike. Meanwhile, Lieutenant-Colonel David Stirling of SAS fame set up a force called GB75, and prepared to break the power of the pickets.
Even milder-mannered mortgage-holders found themselves facing severe costs, as an eight per cent average mortgage rate in 1972 climbed to 11 per cent in 1974. No wonder that by the following February, the Sunday Telegraph wrote that “hatred and fear of inflation have induced … a much fiercer spirit of anger and bitterness than socialism ever did”.
During 1974’s autumn election, the Conservative Shadow Environment Secretary sought to help – but was criticised for recklessly promising to push interest rates down to 9.5 per cent, through government subsidy. Who was the politician concerned? One Margaret Thatcher.
Not just mortgage holders
Rising prices also hit those rather lower on the income scale than retired colonels. In June 1975, the Daily Mirror declared that “for those at the bottom of the scale – the lowest paid and pensioners – inflation is a nightmare”. Reportedly, 700,000 parents were going to bed hungry at least every fortnight, “just to keep their children fed”.
However, as the Mirror implicitly admitted, those in union jobs were getting by, because wages were rising with prices. And then there were the billions of pounds of subsidies for basic foods delivered by Shirley Williams, Labour’s Secretary of State for Prices and Consumer Protection.
1970s cost of living crisis: was it worse than 2023?
So how does all this compare with 2023? In 1974, when interest rates were 11 per cent, the Guardian reported average house cost £11,000, and monthly repayments zoomed up to… £100 a month.
And 48 years after the Mirror reported on all those parents going hungry to feed their children, the same paper reported another survey, which found “one in six parents go hungry” to feed their kids, while others had stopped buying fruit and meat.
This time, high inflation has struck an economy that was already more unequal. It is striking that there have not been more visible expressions of fear like those of the aggrieved ex-colonels. But if the anxieties induced by inflation today are expressing themselves more quietly, they appear to be rather more widespread. And for the country overall, 2023 now seems even more frightening.
- Read next | Britain’s century of boom and bust: how inflation has haunted British governments since the Second World War