The United Kingdom Economy 1960–1979 a Generation of Decline
| Author | Gareth Locksley |
| Published date | 01 November 1981 |
| Date | 01 November 1981 |
| DOI | http://doi.org/10.1111/j.1467-9256.1981.tb00051.x |
| Subject Matter | Article |
8
Gareth
Locksley
THE UNITED KINGDOM ECONOMY
1960-1979
A
~ENERAT~ON
OF
DECLINE
GARETH
LOCKSLEY
2.
Introduction
At
the end of
1980
the
UK
Economy was producing less than during the period
of the 'three-day week' of
1974.
This appalling condition is not just
the
out-
come
of
current economic policies but reflects the trends of a generation. For
a large proportion of the population their reference period starts around
1960.
Over the period real incomes have increased but there have been successive crises
and strenuous attempts, at policy level, to arrest the growth in real incomes
with
considerable political and social consequences. Meanwhile the
UK's
interna-
tional trading partners have advanced, achieving growth rates in excess of those
in the
UK.
The purpose of section
2
of this short paper
is
to make international
comparisons between the
UK,
the
EEC
member states, Japan and the
USA
and there-
by indicate the extent of the
UK's
relative decline. Section
3
examines the inter-
national levels of real labour costs and questions the primacy they hold in
UK
economic policy. The fourth section studies the relative levels of outward dir-
ect foreign investment and suggests that the high rate of leakage in the
UK
is
partly responsible for the
UK's
decline. The final section comments on the struc-
ture and character of the
UK
economy and the position of the giant firms within
it,
indicating the possible extent of their responsibilities for the decline.
This raises the question of the role of economist and implies that much of our
work is misdirected.
2.
The
Extent
of
the Decline
The key variable
to
illustrate the decline
of
the
UK
economy
is
Gross
Domestic Product.
plus taxes linked to imports and less intermediate consumption. The distribu-
tion of
GDP
between end uses and economic groups crucially influences social and
political tensions, expectations, attitudes and future economic performance.
Table
1
provides an international comparison of the volume of
GDP
at market pri-
ces for selected countries for the generation
1960
to
1979.
Eur
9
(the first
row) is an index
for
the combined
GDP
of
the nine
EEC
countries
from
1960
onwards
and provides a European bench mark against which the performance of the
UK
eco-
nomy can be judged. Since the
UK
is
included in Eur
9,
the movement
of
the Eur
9
index is influenced by the
UK
index. In
1960
the
UK
started from
a
higher base
than any other country considered, thereby raising upwards the Eur
9
index for
1960.
Luxembourg, in volume terms,
so
depressing the Eur
9
figure. Comparisons between
the
UK
and all other countries considered attest the relative stagnation of the
UK
over the period.
An alternative method of comparing
GDP
is
to look at the individual shares
of
total
GDP
for a given group
of
countries over a number of years.
parisons are difficult and subject to errors because individual price levels and
exchange rates are continually changing. Table
2
is
based on
1975
prices and
exchange rates and presents the shares of
EEC
member countries
in
aggregate
EEC
GDP
1960
to
1979.
Over the period total
EEC
GDP
at market prices increased by
108
per cent (at
1975
prices and exchange rates). The most important features
of
Table
2
are that during the period the shares of the
FDR,
the Netherlands, Belgium,
Luxembourg, Ireland and Denmark remained fairly stable indicating that these coun-
tries
kept
up
with the general rate of expansion. Both France and Italy increased
their share of
GDP
indicating they expanded faster than the general rate. However,
the
UK's
share showed a considerable decrease,
or nearly a
23
per cent fall.
So
in the context of the
EEC
nine member states
GDP
represents the economy's output of goods and services,
By
1979
the
UK
had moved forward less than all other countries, except
Every country has out performed the
UK
when
GDP
is
considered.
Such com-
falling by
4.8
percentage points
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