“Although the Seventies remains a salutary lesson in what can happen, we should not talk ourselves into believing we are inevitably heading for a repeat performance.” So argued Jon Cunliffe, Deputy Governor of the Bank of England, back in April. I wonder if he’s having second thoughts. The number of strikes either under way or in prospect this summer has already led to claims that we are living through a “summer of discontent”, the 2022 equivalent of the “winter of discontent” that shut down much of the UK in 1978/79.
I fear, though, that the latest bout of inflationary pressure is not being recognised as the provocation it may prove to be. Days lost to industrial disputes have been minimal since the early-1990s, but inflation too has been remarkably well-behaved since then. The latest acceleration in inflation is, therefore, a real test. Have industrial relations permanently improved — as many policymakers would have us believe — or is the quality of industrial relations ultimately contingent on the prevailing inflationary environment?Reconsider the disputes of the Seventies, mentioned by Cunliffe. One version of British economic and political history in the Sixties and Seventies claims that inflation was running out of control long before the 1973 oil price shock for the simple reason that industrial relations were already very bad. But while industrial relations may indeed have been bad, they were not the ultimate cause of the soaring inflation that blighted Britain’s economy in the Sixties and Seventies.
