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1980s Economy

Decent Essays
The onus of this essay is to support it with broad range of data, statistics, economic models and theory to revive and analyze the real causes which left dramatic effects on the economy by discussing the major events and effects it had on the general public that turned a once prosperous economy into turmoil. We shall look at many major factors which triggered the downturn from a different spectrum such as high levels of unemployment, the cost of living, public spending interest rates and many more.

Late 1970s and early 1980’s (1979-1983) was a turbulent period in the history of United Kingdom’s economy. Britain welcomed their first female prime minister when they were facing major economic volatility. 80s was the phase when UK was facing cost push inflation like a lot of other countries around the world. Due to the aftermath effects of 1970s when rising “oil prices costs shifted from $3 per barrel to $12”
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As we can see from the graph above UK’s inflation in 1980 was 18% followed by a steep drop in 1981 of 11.90%, 8.60% in1982 and lastly 4.60% in 1983 resulting in a highly disinflated economy due to inflation rates sky rocketing which however was dealt severely by the government by decreasing budget deficit and charging higher taxes by cutting extensively on spending.

The graph above demonstrates the enormous levels of unemployment during the early 1980s which put over “three million people out of work in 1983”. I believe the strong decline of the trade union power in this phase resulted in deterioration of employment due to tight monetary policy with critical reasoning such as unions not having enough power to push up the wages and wage demands not meeting up to the point of
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