British Economy

1. The Rise to Economic Supremacy:

Britain became the leading economic and trading power in the world. This devolopment was caused by several factors:

- The Industrial Revolution:

- Britain was the first country in the world which introduced the factory system and mechanizised the manyfactories

- Britain had a lot of natural resources like coal and iron and colonies, from which they got cheap supplies of raw material

- The colonies were also a secure market for British goods

- BritainÒ's important merchant fleet1

- Britains entrepreneurs were willing to invest capital in technological innovations

- A strong banking and credit system was neccessary

- The textile industries, the coal mining and the iron and steel industries were very important for Britain

- the British industry kept ist leading position although other European countries and the USA had become powerful industrial nations too

1. Economic Decline

After the second World War, Britain has lost its leading postion. This had several economic, political and social causes.

politico-economic reasons:

- loss2 of British capital during the two world wars

- loss of colonial markets

- antagonistic3 economic principles of the alternating4 Labour and Tory governments

- Lack of innovation and modernization, mismanagement and low productivity especially in the traditional industries (coal, iron, steel, textiles)

- Low exports of British-made goods and increasing dependence on foreign- manufactored imports

- Inadequate infrastructure

- Bad relations between the Trade Unions and management * numerous official and unofficial (or so-called ,,wildcat") strikes; there are more than 400 different unions in Britain which are loose organized

During the 60Ò's and 70Ò's, industrial relations deteriorated5 and the amount of strikes in mining, shipbuilding and the car industry began to paralyse6 the country.

Socio- economic reasons:

- rigid class system

- upper class people are generally prejudiced against manufactoring careers

- the class antagonism of the working class leads to industrial conflicts

- class distinctions make it difficult for people from the lower class from moving up the social scale

- dual school system of state and private education* gap between employers and employees

- lack of prestige of managerial jobs* crisis of industrial management

1 kaufmÐ'nnische Flotte 4 abwechselnd

2 Verlust, Schaden 5 sich verschlimmern

3 konkurrierend 6 zum Erliegen bringen

2. Structural changes in the British economy

- traditional industries in South Wales, Merseyside, the Midlands, North East England and Scotland have lost their important role * unemployment and poverty in these parts

- rise of new, fast expanding industries

- light and high-tech industries (aerospace,computer manufactoring, chemical pharmaceutical and plastic industries)are settled mainly in the London conurbation1

- discovery and exploitation of North sea oil and gas * new petro- chemical industry in North East Scotland, Orkney and Shetland Islands

- change in the econ. structure from manufactoring to service industries

- London has maintained and streghtened ist position as international trading centre

3. The British economy in the 80Ò's and 90Ò's

Thatcherism: -reform policy in the 80Ò's

-intended to create an economic climate of competition,

production and efficiency

-government influenced economy

-the Blair government accepts these reforms,but fine tune them

Economic Growth: -caused by strengthening competition, reducing tax rates,

exploitation of North sea oil

-recession in the early 90Ò's, then grew steadily for

several years

-economic problems that arose worldwide in 1998 had effect

in Britain too

Inflation: -the Tories have successfully fought inflation under Thatcher

and Major through austerity2 policies and strict control of the

money supply

-inflation fell from 18% (1979) to 4% (1986), but then doubled