GDP and Unemployment for Great

GDP and Unemployment for Great Britain

GDP/Unemployment Chart, United Kingdom, 1960-2005

Michie and Smith, 1996 and Bized Web site

It could reasonably be said that until 1960, the United Kingdom was either suffering from a post-War recessionary periods a result of the cost of World War II, or it could be said to have been basking in the post-War boom. In either case, modern economic cycles were probably not established until about 1960, when all the soldiers who had come home 15 years earlier had gone to work, purchased housing and begun families. Indeed, until that time, there was a great push toward a welfare state in the United Kingdom, a push that came to an end when, in 1959, Great Britain helped to found the European Free Trade Association (EFTA), a forerunner of the European Economic Community (EEC), which was a forerunner of today's European Union. "Labour returned to power in 1964 under Harold Wilson, and the steel industry was renationalized. The country faced the compound economic problems of a very unfavourable balance of trade, the instability of the pound sterling, a lagging rate of economic growth, and inflationary wages and prices" (Columbia Encyclopedia, 2004, p. 19950). This was followed by a crisis in pounds sterling, which was followed by the government imposing controls and making cutbacks in service (Columbia Encyclopaedia, 2004). By 1970, the conservative government suffered the worse economic crisis since World War II. There was also serious inflation and a great deal of labour unrest and a large balance of payments deficit. These events, and more, coming in a cluster, made it difficult for labour. Although the GDP did not suffer enormously, until 1980, the figures for unemployment were high, and increasing. Unfortunately, the figures for GDP, one measure of the financial health of a nation, were not at all robust; indeed, they barely make it onto the charts in the first twenty years being tracked. Toward the end of that era, in 1974, there was a coal miners' strike that was costly to the economy, although this may have been partially offset by teh3 fact that, in the middle of that decade, the North Sea oil fields were opened (Columbia Encyclopaedia, 2004).

In 1979, Margaret Thatcher, "who set out to reverse the post-war trend toward socialism, was elected. She also broke union power in many instances, partially by fostering a series of laws that made secondary (sympathy) strikes and boycotts illegal.

By 1980, the GDP and unemployment had begun to rise in fairly equal proportion. While the remaining Thatcher years resulted in some interesting developments, perhaps among the most interesting was her agreement to turn Hong Kong over to mainland China in 1997, potentially setting up a blow to the British economy, if not world finance, depending on what the Chinese determined to do with Hong Kong. By 1990, Thatcher was presiding over a dichotomy, decaying industrial cities in the north and a well developed southern economy. As a result, she was replace by John Major (Columbia Encyclopaedia, 2004).

By 2000, GDP was growing at a faster rate than unemployment, possibly due to the fact that Major had obtained an IRA cease-fire, so that Northern Ireland had at least some respite from draining the economy and culture. Indeed, direct rule by Great Britain was abolished in Northern Ireland in 1999, although home rule has resulted in substantial political manoeuvring (Columbia Encyclopaedia, 2004).

By 2005, unemployment was somewhat lower, but GDP had ceased to grow at the rate it enjoyed before 2001, the year of the terrorist attacks on New York City. While the United Kingdom was not directly affected by the attacks, as a partner with the United States in that nation's stand against the Taliban in Afghanistan, and later against Saddam Hussein in Iraq, the United Kingdom not only suffered from the need to spend money on warfare, as well as donating troops and equipment; it was faced with some rancour among its EU allies for its stance. It is probably this, in addition to a global slowdown, caused the relatively minor movement in both measures, GDP and unemployment, retaining them at levels not far different from those of the more robust 1990s.