Sunday, 13 March 2005

British economic decline reversal

This isn't really a libertarian-related thread, albeit I thought I'll post it.

In the 1950's and 1960's, it was felt that the UK economy was not growing as fast other major industrialised economies. At the end of WWII, the UK still was the largest economy in Europe. In 1960, it had been overtaken by (what was then) West Germany. This relative decline continued until the 1970's, when an IMF bailout and industrial unrest occured.

Since then though, the British economy has performed well in relation to the other big European economies. In the 1980's UK GDP averaged 2-2.5%, which was essentially the same as France, Germany and Italy. In the 1970's UK GDP averaged only 1-2% (in Germany, France and Italy it was 3-5%). In the 1990's, UK GDP averaged 2-2.5% again, which this time was slightly higher than France, Germany and Italy. Over the past ten years, British GDP growth has outpaced those of the other major European economies. In 1990, the UK had the 6th largest GDP in the world. In 2004, it was the 4th largest.

What is the reason for this reversal? It generally can be attributed to the Thatcher reforms of the economy in the 1980's. The Conservative governments' at the time implemented a monetarist economic policy, curbed the power of the trade unions, privatised state industry and liberalised the labour market. The Conservative Major government and New Labour under Tony Blair have largely accepted these reforms.

So even though Thathcer is 'detested' by the British people (to be frank I'm not a major fan of hers), her governments' probably were responsible for Britain's presently solid economic state.