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Narrative Account of the Great Inflation in the UK, 1961–1997

Author

Listed:
  • Michael Bordo

    (Rutgers University)

  • Oliver Bush

    (Bank of England)

  • Ryland Thomas

    (Bank of England)

Abstract

This narrative paper provides a detailed account of the Great Inflation in the United Kingdom from 1961 to 1997, serving as a companion to the analytical account of fiscal policy presented in Bordo, Bush, and Thomas (2025). We discuss the background fundamentals in place at the outset of the Great Inflation and document the distinct phases of inflation, the unique features of the UK’s experience relative to other advanced economies, and the interplay between fiscal, monetary, and incomes policies. By placing the UK’s inflationary episodes within their institutional and historical context, this paper offers a qualitative perspective that complements the quantitative analysis of the main paper and informs ongoing debates about the causes and consequences of persistent inflation.

Suggested Citation

  • Michael Bordo & Oliver Bush & Ryland Thomas, 2025. "Narrative Account of the Great Inflation in the UK, 1961–1997," Working Papers 348, Princeton University, Department of Economics, Center for Economic Policy Studies..
    • Handle: RePEc:pri:cepsud:348
    as

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    File URL: https://gceps.princeton.edu/wp-content/uploads/2025/10/wp348_BordoBushThomas_UK_NarrativeAccount.pdf
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    References listed on IDEAS

    as
    1. David Aikman & Oliver Bush & Alan M. Taylor, 2016. "Monetary Versus Macroprudential Policies: Causal Impacts of Interest Rates and Credit Controls in the Era of the UK Radcliffe Report," NBER Working Papers 22380, National Bureau of Economic Research, Inc.
    2. Woodford, Michael, 2001. "Fiscal Requirements for Price Stability," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(3), pages 669-728, August.
    3. Lucas, Robert E, Jr, 1973. "Some International Evidence on Output-Inflation Tradeoffs," American Economic Review, American Economic Association, vol. 63(3), pages 326-334, June.
    4. Michael D. Bordo & Owen F. Humpage & Anna J. Schwartz, 2015. "Strained Relations: US Foreign-Exchange Operations and Monetary Policy in the Twentieth Century," NBER Books, National Bureau of Economic Research, Inc, number bord12-1, December.
    5. Robert E. Hall & Thomas J. Sargent, 2018. "Short-Run and Long-Run Effects of Milton Friedman's Presidential Address," Journal of Economic Perspectives, American Economic Association, vol. 32(1), pages 121-134, Winter.
    6. Taylor, Alan M. & Aikman, David & Bush, Oliver, 2016. "Monetary Versus Macroprudential Policies: Causal Impacts of Interest Rates and Credit Controls in the Era of the UK Radcliffe R," CEPR Discussion Papers 11353, C.E.P.R. Discussion Papers.
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    11. Goodhart, Charles A. E. & Needham, Duncan J., 2017. "Historical reasons for the focus on broad monetary aggregates in post-World War II Britain and the ‘Seven Years War’ with the IMF," Financial History Review, Cambridge University Press, vol. 24(3), pages 331-356, December.
    12. Rotemberg, Julio J & Woodford, Michael, 1996. "Imperfect Competition and the Effects of Energy Price Increases on Economic Activity," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 550-577, November.
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    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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