Whatever happened to boom and bust?
Once the defining rhythm of Britain's economy, the business cycle has been replaced by permanent crisis management
This is embarrassing but I can’t think of any other way to begin. The house in which I grew up backed onto a golf course. Finding errant balls amongst the potted plants was therefore an unremarkable event.
At the age of perhaps five or six, I went to a friend’s house and as we were playing football in the garden, I asked what lay on the other side of the back hedge. My friend patiently replied, “The neighbour’s garden”. I think I just about managed to prevent the shock from registering on my face.
Even then, I did not really believe that every garden in London backed onto a golf course. Although, as my former Evening Standard colleague Simon Hunt noted in a wonderfully forthright column, around 11,000 acres of land in Greater London is dedicated to the sport, representing more than twice the size of the borough of Hackney, population 260,000.
The point I am making admittedly heavy weather of is that children tend to assume their limited life experience is universal. It takes time, effort and a genuine interest in others to learn that this is not the case1. And the same principle extends to the past, a place where they famously do things differently.
Britons of a certain vintage will recall that the economic story of post-war Britain has been one of boom followed by bust. Indeed, in his first Pre-Budget Report as chancellor, Gordon Brown neatly spelled out the problem, sparing neither Labour nor Conservative predecessors:
For 40 years our economy has an unenviable history, under governments of both parties, of boom and bust. Stop-go has meant higher interest rates, less investment, few successful companies and lost jobs. It has been the inevitable result of a failure to take the long-term view.
These words came 21 years (and several recessions) after James Callaghan’s famous address2 to the 1976 Labour Party conference in Blackpool, in which he told the history of the previous 20 years:
We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step. Higher inflation followed by higher unemployment.
Of course, the concept of a business cycle is not a uniquely British phenomenon. But we did seem to take to the ups and downs with gusto. Indeed, booms were often unfavourably attached to chancellors (see: Barber, Lawson) as if they were Category 4 storms.
What I’m trying to land on (but keep getting distracted) is that, in the context of UK economic history, 1997 is not all that long ago. In fact, as late as spring 2007, in his final Budget as chancellor, Brown bellowed that favourite refrain, “We will never return to the old boom and bust.” This is something that really did occupy the minds of the political class.
Check out this edition of Newsnight from October 1996. Chancellor Ken Clarke had just raised interest rates by 0.25 percentage points3 because the economy was growing a little too quickly for comfort, and everyone from Jeremy Paxman to economic analysts was going on about yet another boom dissolving into bust. Yet today, the concept feels almost comically old fashioned. Like still fretting about the latest balance of payments figures.
A few years ago, the National Institute of Economic and Social Research (NIESR) produced a terrific history of the business cycle in Britain dating back to 17004.
The report’s main findings are:
The UK’s business cycle has (perhaps unsurprisingly) been fundamentally altered over the last three centuries, with the duration increasing from 3.4 years during the long 18th century (1701-1816) to 16 years in the post-war period (1948-2009).
Recessions have, mercifully, become less frequent. They occurred approximately every other year during the 18th century, every four years during the 19th and first half of the 20th centuries, and every nine years in the second half of the 20th century until the 2009 Global Financial Crisis.
Post-war recessions have, on average, been longer than those in the 18th and 19th centuries.
The average recession has been tick-shaped, characterised by a short contraction and a longer recovery, albeit with quite large variations, demonstrating “the heterogeneity of recessions in British history”.
A cursory glance at the post-war period shows the pattern of boom followed by bust that Brown describes, and claimed to have abolished:
1956: Suez Crisis, rising inflation, credit squeeze
1961: US recession, high interest rates
1973-74, 1975: Oil crisis, stagflation, strikes, industrial decline
1980-81: Government spending cuts, switch to monetarist policies
1990-91: Hangover from ‘Lawson boom’, high interest rates, US recession
2008-09: Global financial crisis, credit crunch
2020: Covid-19 pandemic
2023: High interest rates to combat post-Covid inflation and energy spike following Russia’s full-scale invasion of Ukraine
Clearly, sectoral shocks are nothing new. Centuries ago, these were often agricultural. As technology advanced and farming became an increasingly minor proportion of the overall economy, the shocks would manifest as financial crises or war. Which brings us to the UK economy since 2008.
Britain has been buffeted by what feels like an accelerating series of exogenous shocks over the last two decades. In place of pump-priming chancellors, we have endured the Global Financial Crisis (2008), Brexit (2016), Covid (2020), Russia (2022) and now Trump’s tariffs (2025). Conspicuous by its absence is growth.
Boom and bust may have faded from our lexicon, but the underlying instability endures. Meanwhile, the UK has fallen into a new kind of pattern, characterised less by overheating and excess, more by low growth, scarcity and nasty surprises.
Once the defining rhythm of Britain's economy, the business cycle has been replaced by permanent crisis management.
Of course, we all know people who never seemed to clock the concept
A speech widely credited to his son-in-law and future BBC Economics Editor, Peter Jay
Bank of England independence and interest rate-setting powers were still six months away
Shaded lines represent recessions
Wow it certainly feels like it!!