United Kingdom

Under Neville Chamberlain, who became chancellor of the Exchequer in November 1931, the coalition government pursued a policy of strict economy. Housing subsidies were cut; Britain ended its three-quarter-century devotion to free trade and began import protection; and interest rates were lowered. Manufacturing revived, stimulated particularly by a marked revival in the construction of private housing made possible by reduced interest rates and by a modest growth in exports as a result of the cheaper pound. Similarly, unemployment declined, although it never reached the 10 percent level of the late 1920s until after the outbreak of war.

In terms of the occupational structure of Britain, the aftermath of World War I saw the decline of the great 19th-century staple industries become increasingly sharp, and the interwar experience of textiles was particularly difficult. The great expansion of mining after 1881 became a contraction, particularly from the 1930s, and domestic service, which itself may be termed a staple industry, suffered similarly. In 1911 these sectors accounted for some 20 percent of the British labour force, but by 1961 they accounted for barely 5 percent. Manufacturing continued to be of great importance into the third quarter of the century, when the next great restructuring occurred. After World War I an increasing emphasis on monopoly, scale, and sophisticated labour-management became apparent in British industry, though there was still much of the old “archaicism” of the 19th century to be seen, both in respect to management practices and the entrenched power of certain skilled occupations. Although different from its 19th-century antecedents, a distinct sense of working-class identity, based on manual work—especially in the manufacturing industry and mining—remained strong until about 1960. This was buttressed by a considerable degree of continuity in terms of residential community. After 1960 or so, the wholesale development of slum clearance and relocation to new residential settings was to go far to dissolve this older sense of identity.

From the interwar years automobile manufacture, the manufacture of consumer durables, and light industry, especially along the corridor between London and Birmingham, as well as in the new industrial suburbs of London, announced the economic eclipse of the north by the south, the “south” here including South Wales and industrial Scotland. In the Midlands electrical manufacturing and automobile industries developed. In the south, in addition to construction industries, new service industries such as hotels and the shops of London flourished. These in particular offered employment opportunities for women at a time when the demand for domestic servants was in decline. London grew enormously, and the unemployment rate there was half that of the north of England and of Wales, Scotland, and Northern Ireland. The effect of these developments was to divide Britain politically and economically into two areas, a division that, with the exception of an interval during World War II and its immediate aftermath, still exists. New, science-based industries (e.g., the electrical and chemical industries) also developed from the interwar period, which together with the multiplication of service industries and the growth of the public sector—despite repeated government attempts to halt this growth—had by 1960 given rise to an occupational structure very different from that of the 19th century.

On the surface the 1950s and early ’60s were years of economic expansion and prosperity. The economic well-being of the average Briton rose dramatically and visibly. But when prosperity created a demand for imports, large-scale buying abroad hurt the value of the pound. A declining pound meant higher interest rates as well as credit and import controls, which in turn caused inflation. Inflation hurt exports and caused strikes. These crises occurred in approximately three-year cycles.

The economic concern then of the British government in the 1950s and ’60s and indeed through the 1970s was to increase productivity and ensure labour peace so that Britain could again become an exporting country able to pay for public expenditure at home while maintaining the value of its currency and its place as a world banker. A drastic run on the pound had been one of the pressing reasons for the quick withdrawal from Suez in 1956, and throughout the 1950s and ’60s Britain’s share of world trade fell with almost perfect consistency by about 1 percent per year. On the other hand, Britain benefited from an unprecedented rise in tourism occasioned mostly by the attraction of “Swinging London.”