The announcement from the Office for National Statistics at the beginning of August – that economic activity in the United Kingdom contracted in the second quarter of 2020 by slightly over a fifth – can have come as no surprise to anyone who has observed the shutdown of high streets up and down the country and the furloughing of something like a quarter of the private sector labour force. Although much attention has been given to the loss of trade for large corporations in the travel business in Britain, such as British Airways, incalculable damage has been wreaked upon small and medium-sized enterprises, which actually employ the majority of workers in the private sector.

In this situation it is useful to take a long-term view, to see how previous disasters and policy errors have affected the economy. The benchmark for economic activity over the last half-century has been 1979. At the time the economy was recovering from the “oil price shock” of 1974, during which the price of oil (on whose imports Britain was then wholly dependent) had quadrupled, and the Labour government was submitting to the monetarist demands of the International Monetary Fund to restrict spending. It was also the eve of the government of Margaret Thatcher. Her brutal industrial policies resulted in the worst depression since the 1930s, mass unemployment and street riots.

Despite the efforts to attract international business – as showcased in the much-bragged-about Nissan car factory in Washington, County Durham – the economy took well over a decade to recover from that forced contraction in industrial production. The collapse of the coal industry, heroically resisted by the National Union of Mineworkers, was merely the most spectacular shutdown of productive activity. Even with the boost from Nissan car production, the motor car industry reached its postwar peak as long ago as 1972, when 1.92 million cars were manufactured; by 2016 production was 1.7 million, and was already declining (Brexit and all that) before the shutdown of car showrooms in March 2020. By then, too, the industry's structure had changed: car production had become “internationalized”, with most car plants being foreign-owned.