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Synoptic Essay Plan on the Economy
1. “No government Conservative or Labour was able to stem Britain’s economic
decline”.Assess the validity of this view of the years 1951 to 1990.
(45 Marks)
Introduction
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WWII seriously undermined the UK economy and 1945+ struggled to recover to pre-war
status and historians arguing that been in decline since WWI.
General consensus that over 1951 to 2007 period the economy was in decline although
debate over whether process has been consistent over period.
Possibility of government policies accentuating decline (i.e.making it worse) or lessening
rate of decline through measures to “stem” the process.
Argument that Britain was in economic decline during 1951 to 1990
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Poor industrial relations in 1951 to 1964 periods with increased TU action due to
ineffective management practices leading to lack of competitiveness.
Reluctance of politicians to address issue of industrial relations (MacMillan and Wilson)
only made situation in the country worse at this time.
Acting too late to deal with problem of industrial relations meant that by the time this
was attempted (Heath) proved to be problematic.
Excessive expenditure on defence throughout whole period 1951 to 2007 at expense of
other aspects (compared to competitors) was a problem.
Poor levels of productivity and inability to compete with rivals in Europe,the Far East and
USA was a problem with balance of payments being in the “red”.
Development of the welfare state and expansion during 1951 to 1975 period placed
addition financial burdens on state undermining economy (Barnett).
Policies of Keynesianism (1951 to 1975) with “big state” and nationalisation of key sectors
of economy undermined entrepreneurialism within the country.
High levels of taxation (1951 to 1975) within Britain especially at the top end (80-90%)
deterred many entrepreneurs from investing in UK economy.
Government intervention in the economy attempting to have “quick fixes” in terms of
“stop-go” and “prices and incomes” prevented long term planning.
External factors worked against governments over which had no control and caused
problems such as Oil Crisis of 1973 and growth of globalisation.
Policies of monetarism and supply side economics from 1979 to 1990 helped to undermine
economy and intensify decline with collapse of manufacturing.
Policies of privatisation and de-regulation from 1979 to 1990 resulted in lack of coherent
plan for the economy intensifying process of decline.
Major economic crises with devaluation of sterling being required (1967) and loans from
the IMF (1976) indicating the decline of the country at this time
Problems of mass unemployment from the 1970s (over 1 million) rising in the 1980s (over
3 million) indicated that the country was in decline.
Problem of high inflation (25%+ during the mid-1970s & again in early 1980s) indicated
that there were major structural problems in the economy.
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Economic divisions between “North” and “South” as result of Monetarist and Supply Side
Economic Policies intensified decline over course of the 1980s.
Argument that Britain was not in economic decline during 1951 to 1990
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Period from 1951 to 1973 was “Age of Affluence” with post war boom and so called
“Golden Age” with rising living standards & increased wages (Galbraith)
End of austerity in 1950s & emergence of consumerism & greater availability of credit in
1960s and 1970s indicated that economy was not in decline.
Policies of Keynesianism from 1951 maintained low levels of unemployment and sustained
growth until rise in commodity prices with Oil Crisis of 1973.
Development of the New Right with Monetarism and Supply Side Economics led to lower
levels of direct taxation (1979+) leading to economic recovery throughout the 1980s.
Policies of 1980s with lower levels of direct taxes “stemmed” the decline and encouraged
growth with policies of privatisation and deregulation.
Deregulation in the 1980s enabled London to regain status as main financial centre in the
world and becoming the driver for economic growth.
Lower levels of inflation during the 1980s (single figure) & expansion of the service
sector indicated that economy was not in decline.
Successful introduction of trade union reforms in 1980s leading to the end of restrictive
practices created more opportunities for wealth creation.
Expansion of the oil industry during the 1970s & 1980s provided government with income
for low tax regime to encourage economic growth to occur.
Development of the Single European Market (after Single European Act of 1985) led to
growth in the economy towards the end of this period.
Housing boom of the 1970s and 1980s with greater availability of mortgages and with
“right to buy” policy of 1980s indicating economic growth occurring.
Monetarism and Supply Side Economics were essential to enable emergence of new
service economy to replace manufacturing which was in decline.
External factors such as Oil Crisis of 1973 and the impact of globalisation from 1973
responsible for decline rather than specific government policies.
Conclusion
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Period from 1951 to 1990 witnessed decline in manufacturing due to problem of lack of
competitiveness (especially during the 1960s and 1970s).
Although manufacturing economy declined the emergence of vibrant service economy has
taken place especially during the 1980s (helped by oil revenues).
Economic well-being of the population increased from 1951 to 1990 especially in period up
to 1973 but undermined by inflation & unemployment from time.
Improvements in industrial relations since the 1980s have created greater flexibility
within the economy for businessmen and industrialists encouraging growth to occur.
External factors beyond control of government made situation particularly challenging for
both Labour and Conservatives during the 1970s (increase in commodity prices:oil).
No doubt that UK economy been in decline between 1951 and 1990 in general terms but
new areas have emerged and witnessed growth indicating relative nature of the issue.