Inflation revisited: lessons from the 1970s

[5 min read, open as pdf]

• Inflation should moderate in the long-term
• Current circumstances are different to the 1970s
• The focus should be normalising rates and supporting growth

 
In a recent CPD webinar, Elston’s Henry Cobbe interviewed Patrick Minford, Professor of Applied Economics at Cardiff University and economic adviser to Margaret Thatcher in the late 1970s and early 1980s to ask about the fight with inflation in the 1970s and any comparisons for today.
 
While it is tempting to look for similarities with the energy shock and period of sustained inflation that the UK suffered in the late 1970s and early 1980s, Professor Minford highlighted some significant differences.  The lower risk of a wage-price spiral, central bank independence and a track record of manging inflation means lower risk of inflation getting out of control in the long-term.  But the short- to medium-term remains under pressure.  In Minford’s opinion, the risk to the growth is the bigger risk: and this would be the right time for HM Treasury to worry less about debt ratios, and turn on Government spending taps.

Read full article, open as pdf
Watch the CPD webinar (50mins)