Discussion of the Major Problems Faced by the UK After World War II
The post-war era is a key moment in British economic history. These
decades came to be viewed as a golden age. Immediately after the war,
all available resources were needed for: the re-conversion from war to
civilian production, re-construction of capital stock, and the
recovery of living standards. It was important that the decisions
made by the Government would help improve the economy, as it was very
weak at that time. Some of these decisions, which were in the form
of policies, helped better the economy and without them, the economy
may not be the way it is today.
This essay will explore analyse and the UK economy during the 1960’s
and 1970’s. The major problems, main policy targets and instruments,
and overall economic performance will be compared and contrasted over
the two decades.
The Conservative government were in control of the economy from 1960
until 1964 before the Labour Government were elected in 1964.
Similarly, the economy in the 1970’s began under the control of the
Conservative government until 1974. The labour government then took
over until 1979. And finally, the Conservative government were
elected again in 1979.
The 1960’s started with a Balance of Payments crisis in a rather
slow-moving economy. Economic activity did pick up again in the
second half of the year until mid 1961, but it did not help the
Balance of Payments. In July 1961, the Bank of England feared a
continuous drain on reserves and expected demand to carry on rising.
They feared that the spare margin of capacity that they had left would
gradually disappear if no action were taken. Therefore, deflationary
measures were introduced. These measures included the use of tax
regulators to the full extent and exchange controls were tightened.
The bank rate was raised from 5% to 7% and a call was made for special
deposits. At this time, two reports were published. These stressed
the need for the government to take a longer-term view. On July 25th,
the Chancellor released a statement, which included a proposal for
joint planning arrangements with representatives of employers and
workers. After two months, a formal invitation to join a National
Economic Development Council (NEDC) was issued and was accepted by
employers’ associations. They hoped that there would be faster growth
as many continental countries were doing better than the United
Efforts were made in 1961 to effectively slow down the rise in wages.
A ‘pause’ was called for in July 1961 by the Chancellor and later
through a compact with the unions negotiated by George Brown in 1964.
This ‘pause’ did not last long and the compact didn’t help to slow
down the rise in wages. Hourly wages rose 10% from October 1964 until