Competition and Credit Control, 1971–73

Duncan Needham
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Duncan Needham: University of Cambridge

Chapter 2 in UK Monetary Policy from Devaluation to Thatcher, 1967–82, 2014, pp 46-77 from Palgrave Macmillan

Abstract: Abstract After four months of consultation within Whitehall and the City, Competition and Credit Control (CCC) became fully operational in September 1971.2 Credit rationing by cost replaced rationing by control. Quantitative ceilings were removed after several years of often-painful operation, special deposits were repaid, and the decades-old banking cartels were dissolved.3 What followed was one of the most intense periods of monetary chaos in recent British history. By the time the policy was de facto abandoned in December 1973, the broad money supply had grown by 72 per cent. Britain’s highest-ever inflation, and the worst banking crisis since the nineteenth century, followed hard on the heels of CCC, and despite its adroit handling of the ‘Lifeboat’ operation to rescue the stricken secondary banks, the Bank’s reputation suffered a serious blow.4 Failure to control the money supply under CCC would shape the Bank’s attitude to monetary policy for years to come.

Keywords: Interest Rate; Gross Domestic Product; Monetary Policy; Money Supply; Bank Reserve (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:pal:psitcp:978-1-137-36954-3_3

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DOI: 10.1057/9781137369543_3

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