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British Economy

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Submitted By mahum25
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brit“No government was able to stem Britain’s economic decline from 1951-1990”

Whilst there is a blatant division of interpretations of Britain’s economic performances from 1951 to 1990, of those claiming that Britain suffered gradual and miserable decline until the heroine and saviour Mrs Thatcher came to the helm, or of those arguing that a genuine post-war boom existed throughout a large proportion of the era and Thatcher meddled unnecessarily and indeed harmfully, it is more accurate to take a balanced and differential approach. There is clear evidence of British economic decline from 1951-1990, but to claim that it was utter decline is really a pessimistic front.

Reasons to disagree:
- Period from 1951 to 1973 saw an “age of affluence”, with a genuine post-war boom; Britain’s economy grew around 40% during 1951 to 1964
- Living standards rose steadily until 1973, with low unemployment rates; with a wider sense that Britain was becoming more prosperous and equal. Harold Macmillan captured this in 1957, when he declared that “Britain had never had it so good”; it also highlighted increased consumerism due to greater accessibility to consumer goods throughout the era
- Arguments of “relative decline” are unfair and misleading; nations such as Japan and Germany were utterly destroyed after WW2, so it only makes sense for their nations to advance rapidly as they could start from scratch
- Arguments of a lack of policy and initiative are misleading. Macmillan tried to gain some coherence by setting up the national economic development council (NEDC). Wilson also set up the department for economic affairs (DEA) that launched an ambitious national economic plan. Heath also was a strong technocrat and had clear policies of an economy based on the “social market”, claims that he was a “proto-Thatcherite” are simply wrong
- Thatcher, for all her flaws, did command a radical economic policy, which she did carry through due to her conviction and zeal; whilst Britain did suffer a recession in the late 1980s, it did not feel as if this was going to last
- Thatcher’s policies of privatisation, deregulation and supply-side economics creating incentives, for all their flaws, did allow modernity to filter through the wary post-war consensus. Time was ripe for a change, and she successfully changed Britain’s economic opportunities

Reasons to agree:
- Ongoing stop-go economics throughout the 50s created a lack of direction in the economy, with Britain seemingly not in control of economic policy; responding to economic events only as they occurred. This created a difficult economic situation in 1964, when the balance of payments deficit was £800 million
- Even during affluent times, there was perhaps a lack of control over steadily increasing wage demands, which didn’t bode well for inflation control
- British politicians have had to revert to crisis management on many occasions: * July 1966, Wilson saw the threat of Britain’s foreign reserves dramatically being swallowed up, resulting in a massive setback in its drive to implement its DEA ambitions * 1967 saw Wilson being forced to devalue the pound, was an utter humiliation and coupled with EEC rejection, it made many criticise Wilson for lacking a coherent economic strategy * Heath was forced to a series of so called “U-turns” over his policy of not subsiding large, “lame duck”, industries, by subsidising Rolls Royce and Upper Clyde Shipbuilders * Thatcher was forced to abandon Monetarist principles after 1983 when it became clear that this strategy was incredibly unpopular
- UKs share of world exports fell from 20% in 1950 to 10% in 1970
- World league table of production per head, 1961 Britain was 9th, by 1978 Britain fell to 18th, behind countries such as Iceland
- Industrial relations have been very poorly handled and keeping back British productivity. 24 million working days were lost in 1972 under Heath; the total number of working days lost in Heath’s reign was over 60 million. 29 million working days were lost alone in Callaghan’s reign in 1978 to early 1979
- Failure to implement industrial modernisation, shown through the failures of In Place of Strife 1969, Industrial Relations Act 1971, artificial “social contract” between Labour and the trade unions from 1974 to 1978, hugely devastating psychological blow of the winter of discontent in 1979 highlighting the lack of modernity amongst British industry
- This was further highlighted by the lack of investment to advance machinery: Average British worker in the 1970s would have £7.5k worth of machinery; the average Japanese worker would have £30k worth of machinery
- This could be partially explained by Britain spending too much on defence and trying too hard to be a world power (spent around 6% of its budget on defence in the 1960s)
- Thatcher completely lost the balance over industrial reform, she focused solely on the service (mainly of finance) sector, causing a huge imbalance in the economy; the number of those employed in the manufacturing sector fell from 9 million in 1980 to 4 million in 1990
- Some could argue of a “dole mentality” and over reliance on the welfare state throughout this period creating complacency. One US journalist argued that mentality in the USA was “nothing is impossible, everything is worth trying”, whereas in the UK, it was more “most things are impossible, it’s not worth trying”
- Far from Thatcher removing state dependency, she worsened it, her initial policies created unemployment over 3 million in 1983, with huge consequences for the socioeconomic front
- Thatcher’s paradoxes, taxes and spending went up, and didn’t necessarily create an “economic miracle”, as the economy continued to slither through periods of “boom” and then “bust”

It is thus palpable why many take a black and white approach whilst assessing whether Britain suffered from economic decline from 1951 to 1990, and why no government could stem such miserable and gloomy decline. However, one can’t or shouldn’t underestimate, what Peter Hennessey, describes as the “golden age” from 1951 to 1973. Indeed, because of such radical tactics used by the ever populist Thatcher, it has become common ground to argue that the 1970s was a period of total economic decline due to militant industrial growth. However, this is really a huge overstatement. Had the OPEC oil crisis not occurred, perhaps Heath wouldn’t have had to launch the economically depressing 3 day week, and indeed the miners sensing the opportunity for further strike action. Plus, had Callaghan called a general election in 1978 and not blurt out a further 5% wage restraint, most likely the winter of discontent would not have occurred or in the extremity that it was unleashed upon a wary British public. Of course we can’t deny that consensus economics was decaying, and there is good evidence to support it in causing decline. However, Thatcherite economics also saw a fluctuating equilibrium between economic success and decline. This really highlights the need for a balanced approach; it is not simply sitting “on the fence”, but rather making an informed and accurate judgement that the statement “no government could stem Britain’s economic decline from 1951 to 1990” is simply too simplistic.

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