As Britain navigates the economic challenges of the decade – from changing macroeconomic norms, to our post-Brexit place in the world and the net zero transition – it’s important to learn from past successes and mistakes.
To do this, The Economy 2030 Inquiry – a collaboration between the Resolution Foundation and the Centre for Economic Performance at the LSE – is publishing a series of essays by renowned economists from around the world.
One of the first four essays published – on the lessons and legacies of the 1980s – is written by our Senior Research Fellow, John Muellbauer and David Soskice.
To launch these essays, the Resolution Foundation hosted a webinar with John Muellbauer, Nick Crafts and Diane Coyle. Watch a recording of this event below.
Lessons and Legacies of the 1980s
The 1980s were the last decade when the UK went through such far-reaching structural changes as we face today. Moreover, a number of the problems we now face are themselves legacies of the economic and political choices made in the 1980s. New paths can be set with fresh thinking, but only if we understand how we arrived at our current position. So it is timely to examine the 1980s and try to draw lessons.
Muellbauer and Soskice begin by examining the major shocks and global trends of the 1980s and the challenging legacy the UK inherited from the 1970s. They then turn to key aspects of economic policies pursued by the Thatcher governments, examining macroeconomic policy, financial deregulation, labour market and industrial relations reforms, and policies on education and skills, on European integration and on housing. And they look at how this context and these policies affected income growth, the structure of employment, and inequality.
They go on to examine the long legacies of the 1980s. One of the most profound of these concerns the push for a ‘property-owning democracy’ and how links between finance, housing, instability, and property tax have contributed to low saving and investment rates and impeded productivity growth.
Entrenched regional and wage inequality is another long-term legacy. More positively the shift towards high employment levels can be linked to the flexible labour market reforms of that era. And the benefits of the expansion of higher education are another beneficial feature but this must be weighed against the relative neglect of other skills training which was a feature of the 1980s.
Finally, they draw lessons for the future to help the UK address both inherited problems and the coming structural changes.
- You can read the full essay here, watch the full launch event here, and learn more about The Economy 2030 Inquiry here.
- Muellbauer and Soskice's essay featured in this Guardian piece, Thatcher and Lawson had a strategy – where is Hunt and Sunak’s?
