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The early 1990s recession describes the period of economic downturn affecting much of the Western world in the early 1990s. The impacts of the recession included the resignation of Canadian prime minister Brian Mulroney, reduction of active companies by 15% and unemployment up to nearly 20% in Finland, civil disturbances in the United Kingdom and the growth of discount stores in the United States and beyond.

Primary factors believed to have led to the recession include the following: restrictive monetary policy enacted by central banks, primarily in response to inflation concerns, the loss of consumer and business confidence as a result of the 1990 oil price shock,[1] the end of the Cold War and the subsequent decrease in defense spending,[2] the savings and loan crisis and a slump in office construction resulting from overbuilding during the 1980s.[3] The US economy returned to 1980s level growth by 1993[4] and global GDP growth by 1994.[5]

In Australia, Paul Keating (then Treasurer of Australia, and future Prime Minister) referred to it as "the recession that Australia had to have".[27] This quote became a cornerstone of the opposition Paul Keating (then Treasurer of Australia, and future Prime Minister) referred to it as "the recession that Australia had to have".[27] This quote became a cornerstone of the opposition Liberal Party's campaign during the 1993 election, designed to underscore alleged mismanagement of the national economy by the incumbent Labor Party. Unlike the opposition parties in North America, however, the Liberal Party failed to enter government.

New Zealand

In neighbouring New Zealand, the recession came after the re-election of the reformist New Zealand, the recession came after the re-election of the reformist Lange Labour government. The impact of economic reforms (known as Rogernomics) in the recession led to deep policy divisions between the Prime Minister, David Lange, and the Minister of Finance, Roger Douglas. In response to the recession, Douglas wanted to increase the pace of reform, whereas Lange sought to prevent further reform. Douglas resigned from Cabinet in 1988, but was re-appointed to Cabinet in 1989, prompting Lange to resign. Labour lost the 1990 general elections by a landslide to the National Party, who continued with Douglas' reforms.

Influence on culture

In the United Kingdom

In the United Kingdom, there was a significant wave of rioting at the height of the recession in 1991, with unemployment and social discontent being seen as major factors. Areas affected included Handsworth in Birmingham,[29] Blackbird Leys in Oxford, Kates Hill in Dudley, Meadow Well on Tyneside, Ely in Cardiff and Hartcliffe in Bristol. These were isolated communities devastated by poverty and unemployment, separated from urban centres.[30]

See also