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Competition and Credit Control, 1971–73

In: UK Monetary Policy from Devaluation to Thatcher, 1967–82

Author

Listed:
  • Duncan Needham

    (University of Cambridge)

Abstract

After four months of consultation within Whitehall and the City, Competition and Credit Control (CCC) became fully operational in September 1971.2 Credit rationing by cost replaced rationing by control. Quantitative ceilings were removed after several years of often-painful operation, special deposits were repaid, and the decades-old banking cartels were dissolved.3 What followed was one of the most intense periods of monetary chaos in recent British history. By the time the policy was de facto abandoned in December 1973, the broad money supply had grown by 72 per cent. Britain’s highest-ever inflation, and the worst banking crisis since the nineteenth century, followed hard on the heels of CCC, and despite its adroit handling of the ‘Lifeboat’ operation to rescue the stricken secondary banks, the Bank’s reputation suffered a serious blow.4 Failure to control the money supply under CCC would shape the Bank’s attitude to monetary policy for years to come.

Suggested Citation

  • Duncan Needham, 2014. "Competition and Credit Control, 1971–73," Palgrave Studies in the History of Finance, in: UK Monetary Policy from Devaluation to Thatcher, 1967–82, chapter 2, pages 46-77, Palgrave Macmillan.
    • Handle: RePEc:pal:psitcp:978-1-137-36954-3_3
    DOI: 10.1057/9781137369543_3
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