question about 1979 UK economy

[steve2470]

Hello again. When reading the articles about Thatcher, the Tories/her defenders make it sound as if 1979 UK was in complete shambles, like an economic depression, all the fault of the labor unions (what BS).

My question is, just how bad were things ? I know that Thatcher's "solution" was wrong, if a solution was needed.

Thank you again for your patience with my questions.

Steve

[muriel_volestrangler]

1. Things were messy

There had been a lot of industrial action by the unions, especially over the 78-79 winter - "the winter of discontent". Inflation had been high during the early part of the 74-79 Labour government, but had come down in relative terms by 79 (down to 7.4% in June 78; but back up to 10.3% by the time of the May 79 election). GDP growth had averaged 2% over the time of the Labour government, which isn't great. Unemployment had increased from 2.7% at the start to 5.5% (and had been as high as 6.6% in 1978). The UK had had to request a loan from the IMF in 1976.

For one take on the period, see here: http://libcom.org/history/1978-1979-winter-of-discontent - a far left site, but it looks factual, without much opinion thrown in.

The unions were heavily involved in the state of the country, and there was a lot of support for efforts to limit their power - disputes with unions had pretty much defeated the Tory 1970-74 government too.

[steve2470]

2. thanks for the links and your post nt

[fedsron2us]

3. The 1970s are a much misunderstood decade in British history.

In folk memory (manipulated by the press) high inflation , power cuts, miners strikes and winters of discontent have all been rolled into a single theme and have been placed a the door of the 1974-1979 Labour government. In fact three of these events either started or happened completely under Ted Heath's 1970-1974 Conservative administration. Tory Chancellors Tony Barber's reckless dash for growth in the early 1970s saw a huge expansion of the UK money supply just at the time Nixon was taking the US off the gold standard and OPEC responded by raising the price of oil. This caused inflation soar to nearly 20% per annum in the UK. In order to counteract this trend Heath introduced a prices and incomes policy designed to hold down earnings. Power cuts occurred in 1971,1972 and 1974 when first power station workers and then miners went on strike for higher pay to compensate for the reduced purchasing power of their wages. Eventually Heath's administration called a General Election on the issue of who governed Britain which they lost. the incoming Labour minority Labour government then settled the pay dispute and there were no major disputes in the coal industry until the 1980s.

http://en.wikipedia.org/wiki/Anthony_Barber
http://en.wikipedia.org/wiki/UK_miners%27_strike_%281972%29
http://en.wikipedia.org/wiki/UK_miners%27_strike_%281974%29

The famed Winter of Discontent of 1978-79 was in fact a a separate dispute which arose in the wake of Dennis Healey's 1977 and 1978 Budgets which sought to amend a 'social contract' that the government had negotiated with the Unions and to impose a 5% cap on public sector pay. In many ways the economic policies of Callaghan and Healey post the IMF bail out of the British government in 1976 ( in reality little more than a short term loan that was paid back almost immediately) can be regarded as the first experiments in what came to be regarded as Thatcherism. The strikes of the 1979 Winter of Discontent involved a wide range of industrial and public sector workers but ironically not the miners

http://en.wikipedia.org/wiki/Winter_of_Discontent

[steve2470]

5. thank you for this ! nt

[LeftishBrit]

4. Not good - but I'd take it over the mass unemployment caused by Thatcher

and yes, I'm old enough to remember 1979. It was bad by the standards of that time, with strikes, stagnation, etc; but not as bad as 1972-4 (I even remember that, though less well!) with power cuts, the Three Day Week, etc. And there was a Tory government in the early 70s! Part of the problem in the early 70s was IIRC a fuel crisis due to a petrol embargo by several Arab states; but plenty of the problem was right here at home, with a stand-off between the Heath government and the miners.

Thatcher's approach, as far as I'm concerned, was rather like curing a patient's headache by chopping off their head.

[steve2470]

6. thank you for your input, it really is helpful nt