1980's Unemployment Rate

Figure 1 shows the annual unemployment rate and immigration rate in the United Kingdom over the period of 1983-2010. From Figure 1 we can see that the unemployment rate was relatively high in the early 1980s, at a period when Margaret Thatcher was Prime Minister, and the country was buckling under the strain of mass unemployment and a period of recession. Rather than cutting taxes, Mrs Thatcher and her Chancellor Geoffrey Howe decided to raise taxes and to make it even more brutal they reduced government spending. These contractionary fiscal policies only added to the worsening unemployment levels, which we can see in Figure 1 by the peaking unemployment levels in the mid-1980s. However, towards the end of the

1980’s unemployment levels steadily decreased after a boom period of high economic growth and rising inflation, which you can see in Figure 2.
This was caused by the early 1990’s recession, which begun because of high interest rates and falling house prices, this recession was officially declared in January 1991, after starting in the third and fourth quarters of 1990 – two consecutive quarters of contraction. During the 1990s collapse, unemployment first rose in April 1990 after falling for the previous 44 months, and went on rising for another three years. (Kollewe, J. (2009). The