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The reasons for Britain’s slow economic growth in the 1970s

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  1. Introduction.
  2. Britain's slow growth in the 1970's and the burden of inflation.
    1. Unstable environment and short run policies.
    2. Mounting unemployment and mounting inflation.
  3. Role of Britain's poor industrial performance in the relative economic decline of the 1970's.
    1. Increase in trade union membership and increase in the frequency of labour strikes.
    2. Declaration of emergency frequently in 1970.
    3. Effects of strikes.
    4. Lack of investment and slow growth rate.
  4. The part played by international trade and the balance of payments deficit in Britain's slow economic growth.
    1. Failure to produce products adequate to the world's demand.
    2. Decline in exports.
    3. Increase in imports and oil crisis.
    4. Military expenditure.
  5. Conclusion.
  6. Bibliography.

Britain already had experienced economic difficulties in the 1960s, but the concerns did not grow since the overall standard of living was keeping on rising. On the contrary, the 1970s proved to be much more worrying economically, as they presented a sluggish and lasting economic performance -the average real domestic product grew annually only by 1.9 per cent during the decade. The succeeding Conservative and Labour governments, in spite of their many attempts, were totally unable to improve the situation. This essay will concentrate on discussing the main reasons for this slow economic growth experienced by Britain in the 1970s. It will first start by considering the role of the heritage from past economic policies and the burden of inflation. Secondly, it will look at the global difficulty that British industry faced at that time. Finally, the problem of the balances of trade and of payments will be underlined as an explanation of Britain's relative decline.

[...] Of course, this was bound to lead to a slow economic growth.[17] III/ In the third part, the essay will discuss the part played by international trade and the balance of payments deficit in Britain's slow economic growth First of all, the abovementioned difficulties faced by the British industry created a problem for its exports. Indeed, along with the vast price increases in exports goods and the failure to produce products adequate to the world's demand, these difficulties resulted in a worrying decline in competitiveness of export manufactures: their index of competitiveness, with base 100 in 1970, went down to 93.4 and 94.3 respectively in 1974 and 1976. [...]


[...] In fact, the balance of payments deficits were most of the time the result of public expenses, given that the private balance was rarely negative. Hence, the official balance for the period 1970-1981 amounted to a deficit of almost 23 billion pounds, over 7 billion pounds of which was composed by military spending. This is a striking illustration of the burden that military expenditure meant for the British balance of payments, and, therefore, for Britain's rate of economic growth.[22] To conclude, the essay has found diverse reasons for Britain's slow economic growth in the 1970s. [...]


[...] The Development of the British Economy, 1914-1980 (London: Edward Arnold, 3rd edition, 1983). Porter, B. Britannia's Burden: the Political Evolution of Modern Britain, 1851-1990 (New York: Edward Arnold, 1994). Pugh, M. State and Society: British Political and Social History 1870- 1992 (London: Edward Arnold, 1994). Rubinstein, W.D. Twentieth-century Britain: a Political History (Houndmills: Palgrave Macmillan, 2003). Sked, A. Britain's Decline: Problems and Perspectives (Oxford: Basil Blackwell, 1987). M. Pugh, State and Society: British Political and Social History 1870- 1992 (London: Edward Arnold, 1994), p P. [...]

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