Whatever the rest of the world may have expected,
the British people did not spend much energy
grieving over their lost empire or hankering after
past glories. Apart from crises in which Britain was
directly involved, such as Berlin in 1948, Suez in
1956 and the Falklands in 1982, little of what was
occurring in the outside world distracted them
from domestic concerns. Their attention was over-
whelmingly fixed on the economy at home, on
wage bargaining and wage restraint, on the trade
unions and their growing power, on whether
Britain could keep pace with, and later whether it
could catch up with, the spectacular progress of its
West European neighbours, above all on whether
people felt confident about better times ahead.
These issues decided elections. Chancellors of the
exchequer had to develop policies that would cre-
ate the right economic conditions and the right
mood on election day. Labour and the Con-
servatives attacked each other’s economic policies,
though in practice a consensus prevailed on many
aspects of domestic policy at least until 1979: to
sustain full employment, to aid declining industry
and to promote economic growth. There was, of
course, a price to pay; over-manning meant low
productivity, sheltered industries became less
competitive, and steeply progressive taxation to
meet the costs of these policies had to be exacted.
Britain slipped further behind, its standard of liv-
ing advancing more slowly than that of its West
European neighbours. Yet economic statistics
alone do not accurately reflect the quality of life.Home ownership, for example, had spread to rel-
atively low-income groups, much further than on
the European continent.
Government policies sought a surge in pro-
ductivity, growth in manufacturing exports and a
reduction in imports of consumer goods from
cars to refrigerators, from washing machines to
television sets, which were coming to be regarded
as basic requirements. If these needs could be met
from production at home and if Britain could
export enough to pay for its necessary imports,
the economy could develop healthily. Progress
was made but it ran into periodic crises, and what
became known as stop–go economic management
began to typify treasury policy.
Up to the early 1950s the British economy was
still holding its own in manufacturing, and the
city of London was contributing valuable ‘invisi-
ble’ earnings by providing banking and insurance
services. Western Europe was still recovering from
the war, but the overall trend is made very appar-
ent by the statistics set out in the table below.
The British economy suffered from another
problem. The average rate of 2 to 3 per cent
annual growth hides large variations between the
fast-growth ‘go’ years and the slow-growth ‘stop’
periods. The average annual growth rates of
industrial production in the ‘go’ years of 1953 to
1955, 1959 to 1960 and 1962 to 1964 were a
respectable 5.8 per cent annually, but the ‘stop’
periods in between, 1955 to 1958, 1960 to 1962
and 1964 to 1966, raised production by an(^1) Chapter 73
HOW TO MAKE BRITAIN MORE
PROSPEROUS
CONSERVATIVE AND LABOUR REMEDIES