It’s 1981 all over again

October 18th, 2010

In 1981 in the midst of a recession Geoffrey Howe, Mrs. Thatcher’s Chancellor, brought in a deeply deflationary budget.   As a result unemployment finally peaked at 3.2 million in February 1986.   This time round, with all the signals flashing red for the coming hurricane both internationally and nationally, George Osborne appears set to do the same, with unemployment already at 2.5 million and with 25% spending cuts almost certain to reach 3.5-4.0 million before the cycle is through.   Only there are three major differences this time.  (more…)