How much can looking at economic and political history tell us about what the future might look like? The answer may be found in how closely recent events have mirrored the tumultuous events that defined the 1970s, which is explored in the latest issue of INTEREST magazine (Pages 6 & 7).

Analysis of the similarities comes too late for former Prime Minister Rishi Sunak, who like Edward Heath in 1974 lost his bet that taking a hard line with unions in the face of a wave of industrial action would endear him to the electorate. The new Labour Government’s generous settlements with public sector workers strongly echo then Prime Minister Harold Wilson’s 35% pay deal that ended the 1974 miners’ strike.

But that helped stretch the nation’s finances to the point that Mr Wilson’s successor James Callaghan was forced to go cap in hand to the International Monetary Fund. That’s an eventuality current Chancellor Rachel Reeves will be nervously looking to avoid as she simultaneously seeks to plug the nation’s fiscal black hole while keeping emboldened unions happy and fending off another Winter of Discontent.

And while inflation may have been brought to heel for now, the Seventies offer further warnings. Just as the decade’s price increases were driven by the 1973 Yom Kippur war, so our recent brush with inflation was sparked by conflict in Ukraine, while the threat of more disruption in the Middle East looms large. History suggests the battle for price stability may not yet be won.

As he fights problems on multiple fronts, Prime Minister Sir Kier Starmer should be similarly worried looking back to Margaret Thatcher’s historic election victory in 1979 that brought the troublesome decade to a close.

Read more in the latest issue of INTEREST magazine, which you can read for free here.

- ENDS

‘INTEREST’ is dispatched in advance of meetings of The Bank of England’s Monetary Policy Committee and is distributed free of charge.

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