Early in lockdown it seemed like a good idea to write a list of things to try to achieve, including a list of longer books to read.
Dominic Sandbrook writes rather long books about recent British history – social and political.
His most recent tome Who Dares Wins covers the early Margaret Thatcher years, 1979 to 1982. As often happens, reading the history of yesterday’s economies leads to lessons for today’s investors.
Unemployment after Mrs Thatcher’s election victory was more than 1m, equating to 5 per cent of the workforce and inflation heading for 20 per cent.
To try to reduce inflation, interest rates were raised sharply and through the next three years the government refused to prop up failing companies despite unemployment rising steadily – by 1984 it exceeded 3m for the first time.
This period marked the collapse of a large amount of British manufacturing, but also saw the birth of businesses that have prospered since.
In 1982 the government stopped subsidising British Leyland and started splitting off the more viable parts such as Jaguar.
On the other hand, in 1984 Nissan signed to build its first plant in Sunderland, leading to the success and renowned productivity of the new British car industry.
Less well remembered is that this period saw the birth of many new industries thriving today.
Towns along the M4 and M3 corridors such as Reading, Basingstoke and Newbury thrived, the latter being chosen by Bayer as its British base.
These towns often saw growth in ‘knowledge industries’ including electronics, and benefitted from clustering of skilled workers as well as transport links.
They did not benefit from government aid, though often they did from good local government planning.
However, state aid was not always refused under Mrs Thatcher. Having refused to help the British computer industry when asked by Keith Joseph, she seemed to have performed a U-turn, appointing Kenneth Baker minister for information technology.
The Sinclair ZX81 and Spectrum computers may have been the biggest selling in the world and Britain the first country to have a BBC Micro in every school.
Any comparisons with plans by the current government to create a British technology powerhouse through central planning, I leave to others.
However, it is amusing to think this model for government supporting technology, used by Mrs Thatcher, was the National Enterprise Board, created by Tony Benn.
There are similar straws in the wind in the current environment. Most of all, as the recession bites and unemployment rises, it reminds fund managers to keep an eye out for the shoots of the future growth sectors appearing from the rubble.
Simon Edelsten is global equity fund manager at Artemis
