Key facts on 1992
1992 - Still recession - still various protestations of recovery from politicians! GDP declined by 1 %. Combined effect of the recession raised unemployment to 2.87m - more than 50% of them out of work for more than 6 months, and a third for more than a year. Businesses collapsed at a rate of about 1,200 per week.
But inflation fell to 3% - helped by interest rate cuts. House prices continue to fall, and `negative equity' to rise.
Balance of payments deteriorated slightly to a deficit on current account of £8.6bn, with a 9% increase in imports compared to 4% growth in exports - unprecedented in a recession of this depth.
Norman Lamont's second Budget - almost as exciting as the first. Modest cuts in direct taxation, almost matched by increases in indirect taxes. Overall impact of budget injected about £2bn into theeconomy.
Election year - won surprisingly (?) by Tories. PSBR rising rapidly as recession continues and fuelled by pre-election spending increases - £38bn for 1992.
Interest rates cut further to 7% by end of the year, but partly thanks to UK's departure from the ERM - "Black Wednesday" 16th September 1992. Government raised interest rates to 15% at one stage of Black Wednesday to try to defend the £. Concerns about the UK economy and the French referendum on Maastricht send pound down to its bottom limit. Fears that sterling would be devalued fuelled significant selling of the £ and buying of the Deutschmark. As a result of departure from ERM, interest rates are cut significantly.
Business failures ended the year at 62,767.