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The UK Economy
10 March 2014
by
Sigrid Brevik Wangsness
I. The First Industrialized Nation:
1750-1900
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What is meant by the
Industrial Revolution?
When did it take place in Britain?
Why was B. the first industrialized
nation?
What happened during the Industrial
Revolution in Britain?
Positive aspects? Negative aspects?
The First Industrialized Nation:
1750-1900
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When and why were the
first British trade unions
established?
Britain was called the "Workshop of
the World“ during the 19th century.
What does that mean?
Are there other reasons why Britain
became the leading industrial nation
in the world in the 19th century?
II. Early 20th Century
1. Changes:
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Stagnation of the British economy
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Decline in traditional industries
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Competition
- Other countries industrializing at
an increasing speed
- Britain at a disadvantage since it
was the first industrial nation
Early 20th Century
2.
Still:
The financial centre of the world:
The City of London
Shipping, trade, exporter of
capital (sterling)
The UK economy was an
international economy even at
this early stage
III. The Post-War Period in Britain
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Declining world role
Slow industrial growth compared to
the USA, Japan and West Germany
A managed economy (Keynes)
Consensus
The Post-War Period in Britain
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Development of a mixed economy
Nationalization
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No EEC in 1957 (not until 1973)
Building a welfare state, e.g. the
NHS, free secondary education
The Post-War Period in Britain
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1950s and 1960s: Boom
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1970s: Recession (stagflation)
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1978/1979: “The Winter of
Discontent”
1979: M. Thatcher elected
Prime Minister
IV.
Thatcherism
Some major questions to consider:
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What is “Thatcherism”, and why are the
policies named after Margaret Thatcher
still the subject of heated debates after
so many years?
There is no doubt that MT’s policies had
a major impact on British society at the
time (1979-1990), but to what extent is
Britain’s economy still influenced by the
Thatcher governments’ policies?
Major Aspects of Thatcherism:
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Rejection of Keynes’ ideas of a
managed economy
As little government intervention as
possible – deregulation
Let the market forces rule – free
market and free trade
Major Aspects of Thatcherism:
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Monetarism:
- Curb inflation (in 1979:more than 20%)
- Control the money supply
- Control the interest rate
Cut public spending
Cut taxes - shift from direct to
indirect taxation
Major Aspects of Thatcherism:
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Increase competition
Increase efficiency and productivity,
rationalization
Privatization
Encourage employees and the
general public to buy shares
Major Aspects of Thatcherism:
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Encourage people to buy their own
homes from the local councils
Promote an enterprise culture
Reduce the power of the trade
unions
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Deindustrialization
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Free choice
Mark Knopfler – Why Aye Man
We had no way of staying afloat
We had to leave on the ferry boat
Economic refugees
On the run to Germany
We had the back of Maggie’s hand
Times were tough in Geordieland
We got wor tools and working gear
And humped it all from Newcastle to here
What were the effects of Thatcherism?
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POSITIVE effects:
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NEGATIVE effects:
V. New Labour’s Economic Policy
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Inherited an expanding economy, and
the average annual economic growth
from 1997 to 2008 was 2.8%.
The British economy, so vulnerable in
the past to global setbacks, proved
remarkably resilient to the world
downturn in 2001-2002,
more than four years
after New Labour took
over.
No «Blairism»…
New Labour’s economic policy:
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Economic stability and accountability:
“sound economic management”, “an
end to boom and bust”
Gave the Bank of England
independence to set interest rates in
1997
Less emphasis on free-market
capitalism than previous conservative
governments; New L’s blend of freemarket capitalism and social justice
No «Blairism»…
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No re-nationalization of the former
state-owned companies ("Clause
Four")
A third way? Community and
partnership between public and private
sectors (PPPs)
Working conditions and workers’ rights
were improved, but unions did not
regain their former influence on
government policies
No «Blairism»…
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Introduction of a minimum wage in
Britain
Attempts at reducing poverty
Some 2.5m extra jobs were created by
2008 (though the number of
jobseekers also increased)
Attempts at improving Britain’s
productivity
No «Blairism»…
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Somewhat heavier taxes and more
regulation for firms: from 1997 to
2008 the corporate tax burden rose
from 34.8% to 37.3% of GDP
More public spending on health,
transport and education (the need for
a more skilled workforce)
Emphasis on innovation and new
sectors of the economy
=Not a major change from previous
economic policy