The slump of the 1920s

This is a preview from the National Institute Economic Review, May 2020, no 252.

The largest quarterly fall in output in modern times in the UK (so far) was in the second quarter of 1921 when GDP at constant market prices fell by 12.3 per cent. This was directly followed by the largest quarterly increase in output of 13.7 per cent in the very next quarter.

In this Box, written by Director Jagjit Chadha, we try to place in context the events of the postwar slump in UK economic activity and understand the likely causes of the prolonged decline and its acceleration in the first half of 1921.