Describe the macroeconomic performance of the UK economy over the past 40 years. How does this performance compare with other developed industrial economies?
Describe the macroeconomic performance of the UK economy over the past 40 years. How does this performance compare with other developed industrial economies?
The UK and the world recently have been going through a tough time with the worst recession in 2007 for over 6 consecutive quarters since records began. The recent recession blamed on the careless mortgage lending of the US markets has had a domino effect on the rest of the world, the first big blow was the nationalization of northern rock followed by major bailouts by the bank of America for financial institutions such as Fannie Mae and Freddie Mac showed that there was more trouble to come. Before the recession had hit many countries were enjoying high economic growth and poorer countries looked like they were prospering.
We start from the 1960’s were majority of economies were doing extremely well, this was known as the post war era were things started to change dramatically the start of the industrial revolution in the early 1900’s changed the way most economies operated, the amount of technological change had meant the way people lived and spent money had developed a lot, old manufacturing process of using animals to produce goods had been taken over by machines proving to be far quicker as well as efficient. Unemployment rates in the UK were as low as 2.2% change but rising to an average of 4.5% throughout the 1970-to 1979.
The 1970’s was a huge era during this time things started to change a lot economically the way of Keynesian economics was being scrapped and new ways were being brought in, in Britain this change was signified after conservatives won the vote in 1979 under the power of Margret Thatcher which although signaled change it wasn’t for the better. Growth had gone down dramatically in majority of European countries such as Germany and France from 4.4% down to 2.6% for Germany and from 7.5% to a poor 3.2% for France. The boom in economic activity due to technological advancement had moved on too quick, the great oil crisis in the 1970’s hit global economies and sent out a warning to everyone that the supply of oil was not limitless. Many countries developed non car days and weekends in order to reduce their dependency for oil from the Middle Eastern countries that were facing their own problems of violence which was at its peak through the 1970’s. Unemployment rates had dramatically increased with many people’s jobs being taken over with machinery. The UK’s unemployment had moved to 4.5% which was mainly due to the decline motor industry which was the major employer of the UK labor force, however this was the trend for the rest of the major economies, the USA’s labor was also hit unemployment rates from 4.1% to 6.1% were majority of car manufacturers were letting go of staff. The oil crisis had lead to a decade where new forms of transportation using alternative fuels such as electronic cars were trying to be produced but due to most of them failing the motor industry went into decline. However in other parts of the world the Vietnam War had come to an end in 1973 and that meant stabilization for economies in Asia which were affected during the war. The most dramatic economic change for Britain was the conservatives winning power in the late 1970’s which changed the way the UK worked labor had ideologies about the helping hand and to close the gap between rich and poor however with the conservative views they had the idea of less government spending, weakening the power of trade unions and leaving the free markets to provide for themselves this proved to be a fatal error by Thatcher which lead to her losing power in the next elections.
