Few doubt we’re in for a rocky economic time ahead. My gut feeling is that this is going to be more like the early 1990s than the early 1980s. We’ve gone through a period where wealth has cascaded upwards – much like the 80s – while most people are mired in debt and insecurity. Inflation and interest rates are soaring upwards. And mortgage holders are wondering if it’s time to throw their keys through the door and walk off into the sunset. This recession will be both different and similar to the early 1990s.
I don’t want to get into the technical aspects of the recession thirty years ago. That’s all well documented and I’ve blogged on aspects of that before. What I’d rather convey was what it was like to bounce from the ‘yuppie’ 1980s into the gloom and crisis of the early 1990s.
In late 1989, I became a financial journalist. In the years that followed, I reported on bankruptcies, frauds exposed, lack of banking credit to businesses, and people driven to the edge of desperation. Right opposite my workplace was a half-built office and shops development. Work had stopped when the recession hit. It was as if the country had gone into deep freeze the moment we went into negative growth.
Whereas the early 1980s recession had been something that happened to blue-collar workers in industrial areas in the north and Midlands – the early 1990s recession hit Britons everywhere. This was when white-collar Britain received a grim lesson in capitalist economics.
Ten years earlier, we had been in the midst of the Thatcher economic experiment. The country was polarised. Half the UK thought Thatcher was more or less on the right course. While the other 50% harboured a murderous hatred towards the Tory government. Despite everything, there was a mood of defiance on both sides. Thatcherites bent on their ideological, neo-liberal crusade and the Left equally set on opposition inside and outside parliament.
But by 1990, the Left had been badly wounded and organised labour was on the floor. The Tories were firmly in the saddle but rather like the Rishi Sunak government today looked increasingly inept and directionless. Thatcher had gone succeeded by the colourless John Major (was he really Prime Minister for seven years??). And in the United States, 1992 would see Bill Clinton end twelve years of Republican domination. But not before the Bush presidency had to be endured.
The revolutionary exuberance of the 1960s and punk nihilism of the late 1970s was gone. The mood was more similar to how we feel today. Bewildered, betrayed, and generally fed up. The only difference with the early 1990s is the wild proliferation in our time of conspiracy theories on social media (non-existent thirty years ago) and the growth of extreme-Right and theocratic violent extremism.
By the early 1990s, Thatcher had resigned though Thatcherism continued. But without the mass support of the previous decade. In the 1980s, southern Brits had waved five pound notes at northerners during football matches. One comedian, critical of the prevailing greed culture, created a brash character wielding banknotes called Loadsamoney. But by 1991, that seemed an epoch ago (article continues below video).
Suicides soared in the early 1990s recession
Business collapses and job losses led to marriage breakdowns and a flood of calls to services like The Samaritans. There were 3,893 suicides in 1991 and just over three thousand of those were men. This was still a time when men believed they had to be the breadwinners for the family and often their wife was the only shoulder to cry on. Undoubtedly, there were increased cases of domestic abuse from those who took out their frustration and anger on their own family.
Boys didn’t cry in the early 1990s. Sadly, instead of crying, they ended it all. Suicides among men climbed year on year throughout the 80s undoubtedly fuelled by industrial collapse in the north of the UK and across the “rust belt” of the United States. But it was now office working males in the suburbs who were killing themselves.
Among women, the suicide rate doubled at this time according to The Samaritans. One newspaper article reported that people were still sticking their heads in gas ovens not realising that natural gas would leave you feeling nauseous but not dead.
An article in the British Journal of Psychiatry in early 1992 by Professor Colin Pritchard of Southampton University predicted a rise in youth suicides as unemployment rose. In the previous two years, unemployment had risen by 59% and 250,000 young people had been jobless for over six months. This phenomenon of long-term unemployment, typical in de-industrialised areas of Britain in the 1980s, was now prevalent everywhere.
DISCOVER: The early 1980s recession revisited
Banks worried more about inflation than recession
As we’re seeing now, the central bank decision makers in the United States and United Kingdom worried more about the inflation rate than provoking a recession. Only when weakness in the economy was impossibly to deny any longer, the Federal Reserve in Washington DC started to reduce rates. But by then, the pain to millions of Americans had been unbearable. Ditto in the UK.
Calls to encourage spending and borrowing to avert a downturn were ignored. The bankers believed that the recession would be short and shallow so why encourage consumers to be more active? Clamp down with high interest rates. Grin and bear it. And emerge on the other side. That was the attitude.