Unemployment In Britain Essay

1875 words - 8 pages

Continuing high levels of unemployment was a major issue of concern in Britain during the interwar period of 1918 to 1939, and an issue which triggered a political commitment to full employment that lasted until the mid 1970’s. Despite an immediate post-war economic boom in 1918, the rate of unemployment throughout the period reached as high as 17.0 per cent (nearly three million people) and never fell below 7.4 per cent (M.E.F. Jones, 1984, p.386), a significantly higher rate than the pre-war (1870-1913) average of 5.8 per cent (T J Hatton, 2004, p.347). Much controversy exists about the specific causes of this high rate of unemployment. It is likely that no single factor was solely responsible. Instead here were a number of problems within the British economy and changes in export markets that must be considered in order to understand why the problem existed and why it persisted throughout much of the period.

The end of the First World War triggered a brief economic boom, where consumer demand rose as a result of the spending of income stored during the war. Consumer expenditure per head of the civilian population dropped to a low of £72.26 in 1918, only to rise to £78.48 in 1919 before declining again (S.N. Broadberry, 1990, p.273). This had a catastrophic effect on the shipping industry, where surges in consumer demand caused several ships to be ordered and built. However, such a short-lived boom was not anticipated, and so there was a severe slump in the industry resulting from over-supply. This lead to almost 60 per cent of those employed at the start of the post war period having lost their jobs by 1932 (A. E. Booth and S. Glynn, 1975, p.632).

Pre war Britain relied heavily on certain export industries that generally saw vast decline post war, with exports in 1921 half the level of in 1913 (B. Eichengreen, 2004, p323) . As would be expected, international trade was seldom possible during the war. This resulted in several countries who had previously been reliant on imports from Britain having to expand their domestic industries. Not only did this mean a lower level of dependence on British imports, but also significantly increased competition on international markets. This caused a decline in several of Britain's strongest export industries, which soon resulted in mass structural unemployment. Some of these industries began to improve again in the late 1920’s, only to be knocked back by the wall street crash and subsequent depression of late 1929. By 1932, nearly half of all those employed in the production of iron and steel had lost their jobs (A. E. Booth and S. Glynn, p.632). This caused a further decline in the shipping industry and lead to the creation of the British Shipping Assistance Act in 1935. This gave government the power to lend money to shipping lines with the intention that they would scrap their old ships and build newer British replacements. However, this was not particularly successful, as many of...

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