The 1970s would turn out to be the worst decade of the century in British monetary, financial, and macroeconomic history, as well as that of many other countries in the Organisation for Economic Co-operation and Development (OECD). In Britain, inflation would reach its worst levels ever recorded (wartime or peacetime), serious banking instability would appear for the first time in over a hundred years, there was the largest ever asset price collapse, and the performance of the real economy would be worse than it had been since the late nineteenth century. None of that was obvious as the decade opened, although there were some ominous indicators. The 1967 devaluation had taken longer to work than expected, serious doubts surrounded the effectiveness of lending controls, and inflation was rising. The newly elected Conservative Government of June 1970 seemed set on promoting competition and moving away from the interventionist and planning approach of the 1960s. But there was still the belief that inflation was sensitive to the level of unemployment and that it was essentially a non-monetary phenomenon. In any case, hardly had the new course been set when unemployment started to rise in 1971, and there was an almost immediate reversal of the policies of the 1960s.

At the beginning of the decade, the government believed that they could raise the rate of economic growth, and they set out to do that.