As we now know Britain has entered into recession according to the the Office of National Statistics. Britain’s GDP shrank in Q3 2008 by .6% followed by a 1.5% contraction in Q4, fulfilling the definition of a recession i.e. two quarters of negative growth. What is perhaps more worrying is the fact that Q4’s decline was the worst quarterly drop since the late 1970s where Britain experienced it's "winter of discontent".

Many commentators have drawn comparison between today’s crisis and that of the recession in the 1970s. Between 1978 and 1979 Britain’s economy suffered a huge blow at the hands of unemployment, rising inflation and debt. The reigning Prime Minister Jim Callaghan at the time reverted to the IMF for a £2 billion loan – a figured dwarfed by todays interventions.

 

One can draw parallels between the current crisis and that of the late 1970s. Today, unemployment is rising, inflation far outweighs that of our current interest rate and public debt is rapidly increasing to accommodate the various banking bail outs. However, Britain in 1979 had a very different landscape; consumer culture had not really kicked off, Britain still had a strong manufacturing industry, unions still played a fundamental role in industry and the government was in itself on shaky ground. To this extent the causes of the recession were domestic in nature.

 
Today, Gordon Brown has declared that the recession has not been caused by the domestic issues of inflation or unemployment but rather the break down of the global financial system. This in itself makes it far more oblique and perhaps more dangerous.