The Economy of Great Britain after the Second World War (part 1)

After two world wars and the rapid loss of its empire, Britain found it increasingly difficult to maintain its position even in Europe. Britain struggled to find a balance between government intervention in the economy and an almost completely free-market economy such as existed in the United States. Neither system seemed to fit Britain's needs. The former seemed compromised between two different objectives: planned economic prosperity and the means of ensuring full employment, while the latter promised greater economic prosperity at the cost of poverty and unemployment for the less able in society. Neither Labour nor the Conservatives doubted the need to find a system that suited Britain's needs, but neither seemed able to break from the consensus based on Keynesian economics.

People seemed complacent about Britain's decline, reluctant to make the painful adjustments that might be necessary to reverse it. Prosperity increased during the late 1950s and in the 1960s, diverting attention from Britain's decline relative to its main competitors. In 1973 the Conservative Prime Minister Edward Heath warned, "The alternative to expansion is not, as some occasionally seem to suppose, an England of quiet market towns linked only by steam trains puffing slowly and peacefully through green meadows. The alternative is slums, dangerous roads, old factories, cramped schools, stunted lives." But in the years of world-wide recession, 1974-79, Britain seemed unable to improve its performance.

By the mid-1970s both Labour and Conservative economists were beginning to recognise the need to move away from Keynesian economics, based upon stimulating demand by injecting money in the economy. But it was the Conservatives who decided to break with the old economic formula completely.

Returning to power in 1979, they were determined to lower taxes as an incentive to individuals and businesses to increase productivity; to leave the labour force to regulate itself either by pricing itself out of employment or by working within the amount of money employers could afford; and, finally, to limit government spending levels and use money supply (the amount of money in circulation at any one time) as a way of controlling inflation. As Prime Minister Margaret Thatcher argued in the Commons, "If our objective is to have a prosperous and expanding economy, we must recognize that high public spending, as a proportion of GNP very quickly kills growth.... We have to remember that governments have no money at all. Every penny they take is from the productive sector of the economy in order to transfer it to the unproductive part of it."

During the 1980s the Conservatives put their new ideas into practice and they worked out well.

Skim the text to answer the questions.

1. What was the dilemma for the British economy to face after the World Word II?

2. Why did neither economic system fit Britain’s needs?

3. How did ordinary people feel about the economic decline of the country?

4. Why did Edward Heath make his gloomy predicition in 1973?

5. Who had enough will and power to eventually change the situation?

6. Speak about the reforms which were undertaken in Britain in the late 1970s and early 1980s.

7. The reforms improved the economic situation in the UK, didn’t they?

43. Find in the text the antonyms for the following words:

Finding
Decline
Nervous
Decrease
To worsen
To stick to
supply

44. Fill in the gaps with the words and expressions from the text:

1. Britain found it increasingly difficult to … its position even in Europe.

2. The latter promised greater economic … at the cost of … and … for the less able in society.

3. But in the years of world-wide … , 1974-79, Britain seemed unable to improve its performance.

4. They were determined to lower … as an incentive to individuals and businesses to increase … .

5. We must recognise that high public … , as a proportion of … very quickly kills growth.

6. The Conservatives … their new ideas into practice.

7. Britain struggled to find a … .

8. The alternative is … , dangerous roads, old factories, cramped schools, stunted lives.

9. The former seemed … between two different objectives.

10. Every penny they take is from the … sector of the economy.

45. Find in the text English equivalents for the following:

Стремительный
Рыночный
безработица
соперник
налог
Позволить себе
Производственный сектор
Цель
Стимул
Производительность труда

46. Translate into Russian:

Government intervention
Fit the needs
Full employment
To be reluctant
Painful adjustments
To divert attention
To improve performance
To stimulate demand
Money supply
Public spending