Recession and Recovery in Britain: the 1930s and the 1980s

A few years ago, comparisons were being made between the recession of the early 1980s in Britain and that of 50 years earlier, in the 1930s. The latter was followed by a recovery in output which lasted over five years. A new recession appeared in 1938, but it was swiftly overtaken by growing rearmament and the outbreak of war. On this occasion, the recovery of output has already run for six years and, though there may well be more to come, we now have sufficient figures to make a worthwhile comparison of recession and recovery in the two periods. It is the strong similarity in the strength and depth of the two recessions which makes the comparison of the subsequent recoveries a useful measure of the success of recent economic performance. In terms of annual data 1929 and 1979 were the peaks of the preceding expansion, and we take advantage of the coincidence of the last digit. Those variables expressed in index number form are taken as 100 in the years 1925 and 1975, and we characterise the periods 1925-37 and 1975-87 as Then and Now. Data for Then are taken mainly from Feinstein (1972) and for Now from Economic Trends and other current official sources.