Economic Crises of the 1970's

Stagflation: High Unemployment and High inflation; low GDP and low corporate earnings.

- 1971
- The United States withdrew from the bretton Woods Agreement [1]
- Resulted in inflation in world markets, slowing economic prosperity

- 1973
- Egypt and Syria attacked Israel
- In response, the Organization of the Petroleum Exporting Countries (OPEX) imposed embargo and reduced the production of oil, which all helped to skyrocket the price of oil, and further slowing down the economy. A recession and high inflation occurred at the same time, and is known as . [1]

Britain’s economy was also affected. The Labour party declared that public expenditure would no longer help the situation, and the government chose to step back from the economy to allow it to recover on its own. This is due to both the inflation causing the cost of programs to rise as well as the lessened tax revenue the government had to work with. As the governments are starting to step out of the situation, economic thinking was starting to shift right. [1]


  1. "Evolution of Modern Liberalism." Perspectives on ideology. Edmonton, Alta.: Alberta Education, 2010. 208-210.
  2. “Get Ready for 1970’s Stagflation.” Black Swan Insights. 18 Mar 2012. <>