economy

a labour government had been elected in 1945. - the pary was ideolgicallly opposed to imperialism
1947: India was granted independance
moratorium on the independance movement for ten years (corresponding to the return of the conservtives to power)
disaster of Middle East in the 1956 Suez Canal crisis snd the advent of Harold Macmillan as a realistic, pragmatic prime minister in 1957 provided a spur to this process
the empire had underpinned British prosperity for over a hundred years by providing both w source of cheap raw materials and ready markets for her own manufactured goods
when Britain joined the EEC at the beginning of 1973, it had to give up these special trade agreements, and so the benefits of the british empire were lost
net effect on Britain was detrimental: the problem was exacerbated by the post war recovery of the western european economies and the “economic miracle” which japan was enjoying

Britiain retained it’s position as a leading economic power into the 1950s
to some extent the relative decline can be seen as inevitable
problem of maintaining public services, maintaining capital investment when the profitability of British industry was declining, the difficulty of staying competitive in a world where competition was intensifying
the country was forced to adjust to its new, lower, economic status
labour governments of harold wilson in 1964-70 attempted to modernise British industry, but this largely failed in the face of the economic crisis: the development of the concorde aircraft at that time was a typical example
British science and engineering was capacle of producing the world’s first supersonic airliner, but it never reached full-scale commerical production.
same happened to an infant computer industry
membership of the european comminuty provided one possible long term answer to this process

faced by membership of a free market, with more intense competition for overseas customers
Among the problems of the economy were lack of capital investment, low levels od labour productivity, unsettled industrial relations and poor management.
Britain lagged behing its European partners in all these areas

old, traditional industries steadily declined and were replaced by new, service-based or tertiary activities
staple industries such as textiles, iron and steel, shipbuilding and coal mining all suffered gradual decline
british heavy industry could not compete with the rest of Europe, Japan, parts of the third world and the new “asian tiger” economies such as Korea, Taiwan and Malaysia decline in manufacturing industry in the UK:

towards the end of the 1980s, however, progress began to be made partly as a result of the reforms of the thatcher era, which are descirbed below and partly fuled by the strength of thehigher education system
such sectors as finance, leisure and entertainment, technology, computer software, communications and electronics were growing in britain
in these fields britian could and did compete successfully with far Eastern powers, the USA and Germany
% of workfroce employed in Distribution, hotels, catering, finance and other services

in the 1990s, Britain became an attractive subject for inward investment
Foreing companies set up factories all over the country, producing cars, electrical equipment, telecommunications equipment and computer technology
decline of trade union power, resulting in more settled industrial relations, relativlely low wages and large government grants attracted companies like Nissan, Toyota, Honda, General motors, Siemens and Motorola to Britain
still a large manufacturing sector but largely foreign owned
service and techology sector, growing fast and home grown

Britain will have to develop a number of economic qualities
a well educated, trained and flexible workforce, management which is geared to world-wide competition, a willingness to respons to intense competition, higher levels of capital investment, leadership in the field of information technology and full involvement with international institutions
e.g: European union, world trade organisation, World Bank, Internation monetary fund, G7 and the organisation for econmic co-operation and development

industrial relations had improved during the 1980s
labour productivity began to rise and Britain became known for low, rather than excessively high, wage costs
new “tertiary”, serive and technology industries were finding a leading place in world markets
problem of inflation receded in the second half of the 1990s
1992 when the country was unceromoniousyl dumped out of the european exchange rate mechanism
“black wednesday”- culmination of several years of indecisive attempts to adjust to the new european and global realities
1990 onwards: low inflation, low interest rates and low unemployment
economic growth was consistently healthy
rises in investment in public services
centre and to the left: wanted rises in expenditure for public services
demanded reductions in tax levels for the poorer sections
inequalities in standards of living may be reduced

great depression of the 1930s
governments should intervene
they should take positive steps to boost the level og aggregate demand in the economy
by ensuring that consumers, companies and government all spent more money in the economy
by ensuring, that consumers, companies and government all spent more money in the economy, the recession could be ending
lowering the levels of taxation, and by increasing government spending, the overall level of aggregate demand would rise
demand management, underpinned by fiscal policy

keynesian consensus lasted from 1950-1979
control level of demand
demand was best controlled through levels of taxation and government expenditure
economic activity slowed down - reduce levels of taxation levels and raise government expenditure
economic activity slowed down: reduce taxation levels and raise government expenditure, result in a growth of government debt, financed out borrowing from banks or the general public in national savings schemes
when economic activity was growing fast: danger of high inflation/ too many imports- higher taxation and reduced public spending
labour tended to favour higher levels of tax on high income, while the conservatived opposed high taxes on business profits or on property
labour also adopted, after 1965, a policty of direct legal controls over excessive risesin prices, wages and business profits

1969: Selsdon park Hotel in surrey, this group produced a blueprint for radical change
proposed a reversion to classical economic ideas
announced that controls on price and wage rises were to be removed
no aid for failing industries
government was to disengage itself from strict economic management
1971: new policy gone
inflation rising alarmingly and level of imports
effects of rising wages and prices and several large companies were threatening to go out of business
when rolls royce went bust, heath stepped into save rolls royce with government money
chancellor, anthony barber: forced to raise taxation in order to control aggregate spending and price inflation
known as Heaths u-turn