The writer is a former FT assistant editor and author of the forthcoming ‘Northerners: A History, from the Ice Age to the Present Day’
Troops flooded across ceasefire lines in a surprise invasion, sparking a global energy crisis. The western economy was faced almost overnight with a dire combination of recession and inflation. One affected nation, anticipating acute energy shortages, imposed a three-day working week on factories and businesses.
This was the Yom Kippur war of 1973, when Egypt and Syria launched an offensive in the Sinai desert and Golan Heights, occupied by Israel since 1967. The conflict led Opec, the Saudi-led oil producers’ cartel, to impose an embargo on countries that supported Israel. Oil prices almost quadrupled.
The nation that then imposed a three-day week was not Germany — which today, along with other European countries, faces a possible cut-off of Russian gas supplies — but the UK, which was grappling with an overtime ban by coal miners in addition to oil supply cuts.
Are there lessons to learn for the current crisis? Modern Germany, Europe’s most powerful economy, is a world away from a 1970s Britain beset by industrial and economic collapse. Yet if Russia carries out Vladimir Putin’s threat of cutting off gas deliveries to “unfriendly” countries (still a big “if”), German politicians and businesses will face similarly invidious choices.
Germany and Austria this week took the first formal steps towards gas rationing in the face of Russia’s insistence that buyers of its natural gas pay in roubles rather than euros or dollars. Russia supplies 40 per cent of Germany’s gas needs and 80 per cent of Austria’s. Berlin made clear that if supplies fell short and efforts to reduce consumption did not work, it would cut off parts of industry and give preference to households, hospitals and other critical institutions — a similar choice to that made in 1973 by the UK prime minister Edward Heath.
High energy costs have already forced German steel and chemicals makers to curtail production. Heavy industry accounts for one-quarter of German gas consumption. Berlin has yet to say how rationing would work. The BDI industry body urges measures including loans to prevent businesses from going bust.
In the 1970s Britain’s main problem was electricity, still largely generated by coal. From January 1974, factories and businesses were limited to three days of electricity, either Monday to Wednesday or Thursday to Saturday, while shops, unless essential, were limited to either mornings or afternoons. Street lighting had already been cut by half, offices ordered to keep temperatures below 63F (17C), floodlights for sport outlawed and television broadcasts cut off at 10.30pm on weekdays.
Nothing like it had happened in peacetime and the national mood verged on apocalyptic. There were reports of people queueing for bread, candles, paraffin, toilet paper and cans of soup. In some places motorists, fearing fuel rationing, besieged the pumps. One industrialist warned: “We shall have direction of labour and wartime rationing.” There were dark warnings of a coup or a Weimar-style collapse.
Things were undoubtedly hard, particularly for small businesses and for hundreds of thousands of people who lost their jobs, albeit mostly temporarily. Yet the impact of the three-day week was less severe than many had predicted. There were no widespread power cuts — partly because the weather was mild and the energy-saving measures worked. (Power cuts had happened during earlier disputes in 1970 and 1972).
The three-day week lasted until March 7 and caused less damage to production than expected, partly because companies used ingenuity to keep things going. In Nottingham, clerical staff at cycle maker Raleigh worked without power and light so energy could be switched to production. In Sheffield, a snuff-maker reverted to a waterwheel last used in 1737.
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According to historian Dominic Sandbrook, many businesses lost 40 per cent of working hours and maintained production at 75-80 per cent. Many people worked longer hours, so the drop in take-home pay was limited. Unemployment rose only from 2.1 per cent in December to 2.4 per cent in February.
On the face of it, this might offer comfort to Germany and others. Alas, one reason why UK businesses were able to increase production is that they lacked efficiency beforehand. Modern German firms have less scope for a sudden productivity boost. The point about ingenuity and priorities still holds, though. If supplies of gas are restricted, it makes sense to focus on essential operations. Serious energy-saving now could reduce problems later.
Olaf Scholz, Germany’s chancellor, will want to avoid the fate of Heath, who called a general election seeking support for his battle against the miners and lost. If Scholz acts rationally and holds his nerve, Germany can get through this crisis.