CHAMBER ARCHIVE SERIES - ECONOMIC HARDSHIP: HOW HAVE WE FACED THIS BEFORE?
Greater Birmingham Chambers of Commerce
The current inflationary economic situation and cost of living crisis poses significant risks and challenges for businesses in Birmingham. However, when looking at the economic crises of the past it’s clear that despite hardship, these challenges have been faced before and not only has the region bounced back but new opportunities were created.
Through the lens of archival records, the Birmingham Chambers of Commerce Annual Reports of the Council in the 1930s and 70s give an insight into previous periods of economic instability as well as their recovery. The Chamber’s consistent role in helping businesses and supporting the community in Birmingham is clear, relieving anxieties and promoting new opportunities and growth in the region for over 200 years.
The Annual Report of the Council 1931 described the events of the year, adding that they ‘could scarcely have been worse’. After the stock market crash in 1929, there was a worldwide depression which led to a period of high unemployment and deflation.
The pound was devalued in 1931 to boost exports and domestic demand and budget cuts were made by the government. The Birmingham Chamber of Commerce played a vital role in recommending changes that could be made to help the economy, advising an adjustment of unemployment benefits in accord with what the country could afford.
The chamber led key domestic movements such as the nationwide ‘Buy British’ campaign, encouraging consumers to buy domestic products to support the economy which in turn supported their members too. Collaborating with other British Chambers, representatives from Birmingham attended the Annual General Meeting of Commerce in September where they discussed measures that needed to be taken to solve the critical financial situation and how to implement them nationwide.
These included potential increases in taxation, limiting excessive operating costs for companies and the imposition of protective tariffs to increase output. These representatives also attended the Sixth Congress of the International Chamber of Commerce in Washington attended by 37 countries worldwide. The meeting attempted to resolve international debt settlements and brought about the opportunity for global cooperation to end industrial and commercial stagnation.
By 1933, these measures had already taken effect. There was ‘increased commercial activity and a buoyant tone’ and the review shows a general growth in prosperity just two years after.
Developing international relations played a key role in these improvements and worldwide communication is emphasised as vital in sustaining growth, leading to a greater focus on international relations throughout the 1930s. The fast recovery of the region and the country is written in the report to be a ‘tribute to the economic resilience of the economic structure of this country’.
The last cost of living crisis in the 20th century took place in the 1970s which similarly saw high rates of inflation alongside a stagnation in production and output.
Trade union action had led to an increase in the average wage of workers which meant they had more money to spend, but due to the Arab Israeli war, there were insufficient products available. These product limitations caused prices to soar with inflation reaching 25 per cent in 1975. Energy prices went from £11 a year in 1970 to £40 a year in 1979 and the average cost of groceries and food rose 277% from £6.63 to £25.
Birmingham Chamber was once again instrumental in working with the government as well as businesses to counter inflation and recover the economy, at first helping to deal with wage negotiations after freezes on wages and prices in 1972 and an increase in strikes.
By the end of 1973, the three-day week was imposed by the government which limited commercial use of electricity to just 3 days a week in order to conserve it. During this time, the chamber worked 6 days a week and answered an additional 1,245 calls in the week before Christmas, providing their members with information and advice to help them through it.
Particularly, they encouraged them to take advantage of international opportunities and exports while domestic spending was restricted and by 1974 this had begun to flourish, forming new connections globally. Membership of the Chamber grew in this period as more businesses became aware of their functions and successes. Throughout the remainder of the 70s, their role remained of paramount importance as unemployment increased as a result of cuts to the private sector.
Despite their disagreement with governmental policy, the Chamber worked with trade unions to limit violent action and instead construct well supported arguments to enact change. Despite ongoing domestic concerns throughout the decade, by the mid-1980s inflation had been controlled and there was a sustained period of economic growth.
In 2022, many parallels can be drawn between previous economic crises as we are once again experiencing high inflation (The ONS report that the Consumer Prices Index rose by 11.1 per cent in the 12 months to October 2022) and interest rates which haven’t been seen for years.
Food and oil availability are once again limited due to the Ukraine War resulting in soaring prices and problems of productivity similar to that of 1973. Despite what appears to be an overwhelmingly negative economic outlook, as in both 1930 and 1970, there are still opportunities to be taken advantage of which were highlighted in our most recent annual economic review.
The effects of the Commonwealth Games as well as investment into HS2 will see long term benefits for the area and the opportunity to explore markets outside the EU could be extremely successful. As it always has done, the Birmingham Chambers of Commerce continues to work alongside our members, offering consistent support and advice through these challenges. We are proud to be a part of supporting businesses for over 200 years, not only through periods of hardship but also in continuing to encourage new opportunities for growth.