20 February 2017 by Sigrid Brevik Wangsness The UK Economy 20 February 2017 by Sigrid Brevik Wangsness

I. The First Industrialized Nation: 1750-1900 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 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: Stagnation of the British economy Decline in traditional industries 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 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 Development of a mixed economy Nationalization No EEC in 1957 (not until 1973) Building a welfare state, e.g. the NHS, free secondary education

The Post-War Period in Britain 1950s and 1960s: Boom 1970s: Recession (stagflation) 1978/1979: “The Winter of Discontent” 1979: M. Thatcher elected Prime Minister

IV. Thatcherism Some major questions to consider: 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: 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: 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: Increase competition Increase efficiency and productivity, rationalization Privatization Encourage employees and the general public to buy shares

Major Aspects of Thatcherism: Encourage people to buy their own homes from the local councils Promote an enterprise culture Reduce the power of the trade unions Deindustrialization 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? POSITIVE effects: NEGATIVE effects:

V. New Labour’s Economic Policy 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: 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 free- market capitalism and social justice

No «Blairism»… 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»… 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»… 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

Growth in the UK Economy: 1992 - 2008 = 16 consecutive years Conservative governments:1979-1997 Labour governments: 1997-2010 Financial crisis 2008/2009 UK economy in recession