The reasons for Britain's slow economic growth in the 1970s

Gladys B.

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The reasons for Britain's slow economic growth in the 1970s

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Britain already had experienced economic difficulties in the 1960s, but the concerns did not grow since the overall standard of living was keeping on rising. On the contrary, the 1970s proved to be much more worrying economically, as they presented a sluggish and lasting economic performance -the average real domestic product grew annually only by 1.9 per cent during the decade. The succeeding Conservative and Labour governments, in spite of their many attempts, were totally unable to improve the situation. This essay will concentrate on discussing the main reasons for this slow economic growth experienced by Britain in the 1970s. It will first start by considering the role of the heritage from past economic policies and the burden of inflation. Secondly, it will look at the global difficulty that British industry faced at that time. Finally, the problem of the balances of trade and of payments will be underlined as an explanation of Britain's relative decline.

Sommaire

Introduction.
Britain's slow growth in the 1970's and the burden of inflation.
1. Unstable environment and short run policies.
2. Mounting unemployment and mounting inflation.
Role of Britain's poor industrial performance in the relative economic decline of the 1970's.
1. Increase in trade union membership and increase in the frequency of labour strikes.
2. Declaration of emergency frequently in 1970.
3. Effects of strikes.
4. Lack of investment and slow growth rate.
The part played by international trade and the balance of payments deficit in Britain's slow economic growth.
1. Failure to produce products adequate to the world's demand.
2. Decline in exports.
3. Increase in imports and oil crisis.
4. Military expenditure.
Conclusion.
Bibliography.

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Extraits

[...] Pollard, S. The Development of the British Economy, 1914-1980 (London: Edward Arnold, 3rd edition, 1983). Porter, B. Britannia's Burden: the Political Evolution of Modern Britain, 1851-1990 (New York: Edward Arnold, 1994). Pugh, M. State and Society: British Political and Social History 1870- 1992 (London: Edward Arnold, 1994). Rubinstein, W.D. Twentieth-century Britain: a Political History (Houndmills: Palgrave Macmillan, 2003). Sked, A. Britain's Decline: Problems and Perspectives (Oxford: Basil Blackwell, 1987). [...]

[...] The overall reason for these failures can be pointed out as being the absence in Britain of a ‘growth culture', thus resulting in poor results for the entire British economy. Finally, it has to be said that Britain's difficulties to export her products, along with her permanent balance of payments deficits in the 1970s proved greatly harmful towards the capacity of the country to attain a high economic growth. Indeed, we can conclude that the factors explaining Britain's slow economic performance in the 1970s were diverse and numerous, but however all related to each other. Bibliography Cairncross, A. [...]

[...] In 1974, the average augmentation of consumer prices was of 14.2 per cent in the OECD countries. However, that of Britain - 19.2 per cent- stood well above this figure.[7] This gap is explained by the aforementioned factors specific to Britain. Nonetheless, the principal of the domestic elements worsening Britain's situation towards inflation certainly was the huge amount of strikes that demanded higher salaries and took place regularly during the 1970s. Indeed, the present inflation encouraged trade unions to call for an elevation of wages, which thrust inflation even more, which incited trade unions to claim even better wages and so on and so forth. [...]

[...] M. Pugh, State and Society: British Political and Social History 1870- 1992 (London: Edward Arnold, 1994), p P. Howlett, Golden Age: 1955-1973' in P. Johnson Twentieth- century Britain: Economic, social and cultural change (London: Longman, 1994), pp. 328-337. S. Pollard, The Development of the British Economy, 1914-1980 (London: Edward Arnold, 3rd edition, 1983), p B. Porter, Britannia's Burden: the Political Evolution of Modern Britain, 1851-1990 (New York: Edward Arnold, 1994), p L. Hannah, ‘Crisis and Turnaround? 1973-1993' in P. [...]

[...] As to we can quote that the share of GDP dedicated to R&D experienced a decrease, as regards R&D funded by the government as well as by the private sector.[15] These shortcomings originated from numerous factors, such as the aforementioned ‘Stop-Go' policies, international oil crisis and strikes. Some authors point out one more: the relatively elevated level of Britain's military spending at that time. Undeniably, by monopolizing a big part of the resources, this implied less investment -and above all less in the civilian sector than what could be possible otherwise.[16] Last but not least, the overall basis of all these deficiencies certainly is the absence in Britain of a ‘growth culture'. [...]

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