The Debate over Britain's Economic Decline

The crises of the 1970s were the inevitable culmination of long-term economic decline
1. British governments had failed to control public spending, or to face down wage demands from unions.
2. British industry had failed to restructure and invest in modern equipment.
3. Britain's share of world trade had declined steadily.
  1. 1/4 in 1951 to 1/10 by 1975.
4. Technical education had been neglected.
5. Productivity was low compared with foreign competitors.
  1. Average GDP growth from 1950-73: Britan 3%, West Germany 6%, Japan 9%
6. Nationalisation had been a big mistake.
7. Governments (both Conservative and Labour) had intervened too much to prop up failing industries.
8. Too much emphasis on full employment had led to constant problems with inflation.
9. The painful economic reforms introduced by Thatcher after '79 were both necessary and overdue.
No 'continuous decline', the 'Golden Age'
1. The post-war era can be regarded as a 'Golden Age'.
  1. Living standards rose steadily
  2. Rate of economic growth was consistently higher than it had been between 1900-39
  3. Unemployment, the curse of the 1930s, averaged 2%
  4. Year by year, Britain was becoming a more prosperous and equal society
2. Unfavourable comparison with foreign competitors can seem misleading.
  1. Both Germany and Japan had been devestated by WWII
    1. Had had to completely restructure their economies
    2. Neither had been permitted to rebuild their military strength
  2. Looks better when Britain's defence spending (annual average 7% of GDP) is taken into account.
3. Thatcher's radical policies in the '80s were excessively severe and often unnecessary

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The Debate over Britain's Economic Decline

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