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Key facts on 1990
1990 - Inflation 9% for the year - not looking so good. Peaked at 10.9% in September & October - higher than predicted. Everyone surprised when in October 1990 - UK joined ERM. Presumably aimed to help keep inflation down. Inflation not helped by 10% earnings growth. John Major's only budget in March - not a very exciting one, but he
decided not to raise the earnings threshold and so increased the tax burden by £430m. Announced various incentives to help savings - TESSA's (tax exempt special savings accounts). Still had a PSDR, but it was starting to shrink - £5bn surplus in 1989/90 compared to £14.5bn in 1988/89. Bank of England resumed selling bonds after a 28 month gap due to deterioration in finances.
Monetary policy - MO growth fell to 4.9%, first time it had been properly on target since the 1998 Budget. Interest rates were cut in October 1990 by 1 % to 14% to try to alleviate slowdown in activity. Freedom to manoeuvre now severely hampered by membership of the ERM. Monetary policy now linked to Europe (Germany?).
April 1990 - electricity industry was restructured prior to privatisation. 16 new electricity companies created in England and Wales, 3 new generators - National Power, Powergen and Nuclear Electric (all from the old CEGB). National Power and Powergen were sold, Nuclear Electric remained in the public sector. 11 Dec. - they were all sold and large premiums were
recorded. Most were well over-subscribed.
June 1990 - oil price fell to $15 a barrel, the lowest since Dec.'88. But prices began to climb as fears of war in the Gulf took hold. Increased production from Saudi Arabia kept prices down to $30 at the end of the year.
Retail sales were depressed in 1990 - 1.1 % fall for the year. House prices suffered sharp falls, particularly in Southern Britain, but average remained around stable thanks to prices in Scotland and parts of the North continuing to rise.
Balance of payments - Current account deficit £14.4bn, visible trade £18.6bn, not exactly a classic performance, but nevertheless an improvement on 1989. Imports grew 3%, while exports managed 11%, but import growth probably reflected mainly the recession and the cutback in consumer spending. However, export growth was slowing with onset of recession elsewhere.
German re-unification - October 3rd 1990.
Employment - unemployment became the issue again when after 44 months of successive falls unemployment started to rise again in April 1990 to 1,606,600. Pace of increase quickened from there on. But unemployment still lower than many of competitors (France 8.9%, Italy 9.6%); couldn't match performance of Germany Japan and US though (same old story?).
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