Home | Politics | History

Recent History of British Economy

By: pangsiyan

Read More About History

Britain was the first industrialized nation in the world and has remained an economic giant for the past two centuries. By the 1880s, the British economy had achieved global dominance, producing one third of the world's manufactured goods, half its coal, iron, and cotton. The quantity of goods transported in Britain's shipping industry was greater than that of the rest of the world put together.

Although Britain remains one of the Group of Seven1 after World War II, the British economy experienced a period of great difficulty and relative economic decline for the following reasons. First, Britain suffered great losses in the two World Wars. It went heavily into debt to finance both wars, which resulted in economic problems during the postwar period. Second, by the mid-20th century, the era of the British Empire was over. Shortly after the end of World War II, India, which provided raw material and a large market for British goods, gained independence, quickly followed by the rest of the Empire, leaving Britain a medium-sized European country with a population five times less than that of the United States. Third, Britain was forced to maintain an expensive military presence in many overseas locations until the end of the 1960s, when the process of decolonization was completed. Moreover, as one of NATO's major partners and a member of the UN Security Council, Britain had to make substantial financial contributions. The result was Britain spent a higher proportion of its national wealth on military expenditure than most of its competitors. Fourth, Britain failed to invest in industry after World War II. During the war, British industry survived and was comparatively unaffected. However, some of its competitors, especially the defeated Germany and Japan, had to start from nothing. This ostensible disadvantage may have worked in their favor because they were compelled to invest and they could modernize using the latest equipment and means of production. It is no surprising that they were ready to catch up with and even overtake Britain.

In 1945, the Labor Party, which had won a landslide victory in the general election, carried out drastic reforms and laid the foundation for postwar British social and economic development. In 1946, Parliament passed two very important acts to establish a welfare state. Economically, it implemented the nationalization of industries, and exercised a considerable amount of control over private enterprises in order to revive the primary industries and help balance trade. However, inflation and trade deficit were persistent problems that prevented rapid economic development. British industry appeared to be performing poorly, with imports increasing compared to exports. The economic difficulties caused unemployment to rise. The oil crisis of 1973 impaired an already declining picture with the fall of the Pound, the British currency, and very high inflation rates. Although the government changed from one party to another, the economy remained stagnant. Britain's economic growth fell behind that of other western European countries. The negative economic situation led to a change in government at the general election. In 1979, the British people voted in the Conservative Party under Mrs. Margaret Thatcher, who promised radical economic reform.

Thatcher, leader of the Conservative Party, was the first woman to become Prime Minister of Britain. Her government introduced the biggest changes in British economic policy since World War II. She privatized state-owned industries and promoted a more competitive spirit in the British economy. In terms of social welfare, Thatcher's government reduced old age pensions, shortened the period of unemployment benefits, and cut child benefits. Believing that a free labor market was essential for a successful economy, she curbed the power of the trade unions.

Thatcher's revolution seemed in some ways to be a success as inflation came under control and business profits increased. The 1980s saw the recovery of the British economy, although it continued to grow at lower rates than its competitors. However, the negative aspect of Thatcher's reform was a rapid increase in unemployment. In 1982, the unemployment rate was comparable to that of the years in Great-Depression, with three million people out of work. In 1989, 40% of the labor force in London went on strike.

Thatcher and her policies were, and remain, highly controversial. Her supporters contend that she was responsible for reviving the British economy, while her opponents argue that she was responsible for mass unemployment and a vast increase in inequality between rich and poor. However, if judged merely by the economic records, by any standard, Mrs. Thatcher's economic record from 1983 onward was impressive.

In order to separate politics and economic policy, Blair made the Bank of England independent. In social policy, the Blair government changed the old Labor Party's practice of using tax system, public expenditure and price controls to reduce inequality and put an emphasis on the minimum wage and supplementing low incomes. It also emphasized individual responsibility.

The Blair government has been successful in limiting government spending, keeping inflation under control and reducing unemployment. By the end of the century, British economist growth surpassed that of other major European countries.

Article Source: http://depositarticles.com/

Drive from: cheap phones to you. Britain was the first industrialized nation in the world and has remained an economic giant for the past two centuries. Want to know more click retail replica watches.

Please Rate this Article

 

Not yet Rated

Click the XML Icon Above to Receive History Articles Via RSS!
Additional Articles From - Home | Politics | History
Sign Up for a free account.
Our other websites
All about SEO
Beauty Tips Forum
Submit Articles
Member Login
Link Us
Submission Guidelines
Ezine Notifications
Article RSS Feeds
Sitemap
New Stuff
About Us
Developer
Good shopping portal
Link to Us
Contact Us
Privacy Policy
Terms of Service

counter easy hit

Powered by Article Dashboard