The British Economy 1945-2018

Outline of lecture Introduction I The British Model II 2008 questions the British Model III Sectors of the economy

Introduction 6th largest economy 10th largest exporter/6th largest importer Europe’s largest recipient of FDI Globalised economy

I The British Model Assets of the British Economy Drawbacks GDP growth. 1.8% 4.2% unemployment rate. Flexibility of the labour market FDI Low Inflation. 2.4%. Drawbacks Wage inequalities Deficit in balance of trade in goods

After a brief spurt, the rate of average annual pay growth has slowed even though it is still rising faster than inflation to give real pay growth after five years of stagnation and falls.

Despite a number of false dawns, there is no sign of the recovery in productivity growth that is needed for sustainable rises in living standards.

II II Since 2008 questioning the British model. Financial crisis. Gordon Brown’s bail-outs. David Cameron’s austerity policy UK budget deficit : fourth highest in G7 countries (87% of GDP)

III Sectors of the economy Services sector : 78% of GDP Banking, insurance, business services (11,8% of GDP) Financial services : 6.5% of GDP (9.6% in 2011) Industry and manufacturing: 21% of GDP Oil and gas: decline since 2005 Manufacturing : 10% GDP Aerospace Pharmaceuticals telecommunications Agriculture : 0.7% GDP Services suffered in the downturn like the rest of the economy but on official measures the sector had regained its previous peak by the end of 2011, well ahead of the rest of the economy. It continues to expand at a healthy rate.

Industrial production in the UK is still struggling to recover from the recession, remaining around 9 per cent below its pre-recession size.

IV Shift from Keynesianism to neo-liberalism What is the welfare state ? 1946: the National Insurance Act 1948: the National Assistance Act 1946: The National Health Service Act nationalisations in transport and energy

2. What is the Keynesian era? Keynes (1883-1946): Was in favour of state intervention Cf A Tract on Monetary Reform 1924. Keynesian techniques Stop-go policy: in 1964 for example.

3. What is monetarism? Milton Friedman. Thatcher in the 1980s : the breakdown of post-war consensus. “No Lame ducks” a policy of privatisation.

4. New Labour Thatcher’s legacy a sound budget public private partnerships independence of the Bank of England in 1997 Bank bail-outs

5. The Conservatives David Cameron’s Big Society Theresa May’s protectionist conservatism