The Economy

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The Economy

• Chapter 6

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British Disease

• Questions to think about
• What is the British Disease?
• How has the British economy evolved since the
  Second World War?

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• Today Britain is not in the same position as it
  was during the 19th century. Britain is faced
  with severe economic problems. A slow rate of
  industrial growth, unemployment, and a rising
  inflation rate are all major concerns. This
  economic decline is often referred to as the
  "British disease". In the 1980s and 1990s the
  British government has been trying to cure the
  "British disease".

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The Three Periods of the British Economy
Development since the War

• 1. Steady development in the 50s and 60s
• in 1947, British economy returned to pre-war
  levels.
• in 1950, GDP and foreign trade ranked second and
  per capita income ranked third in the world.
• Features slow but steady growth, low
  unemployment and great material prosperity with
  rising standards of consumption.

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• Question to think about
• Whose theory is the economic policy Britain
  pursued in this period based on?

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• The economic policy was based on the theory of
  John M. Keynes.
• He suggested that the government should use
  fiscal and monetary policy to fine-tune demand to
  achieve full employment, while using prices and
  incomes to suppress inflation at source.

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• 2. Economic recession in the 70s
• In 1973, the first oil shock, caused high
  inflation rate.
• In 1977, the second oil shock caused inflation to
  rise still further.
• Features Britain maintained the lowest growth
  rate and the highest inflation rate.
• What policies were adopted in this period?
• Restrictive fiscal policies

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• 3. Economic recovery in the 80s
• In 1979, Mrs Thatcher as the Prime Minister.
• What economic programme was adopted by the
  government under Mrs. Thatcher?
• What measures did the Thatcher government take to
  improve the nations economy?
• Result Britain become a sizable oil exporter
  and integrated with the global economy as well as
  the EC economy.
• What are the features of the economy recovery?

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• Medium-term Financial Strategy based on the
  theory of the new classical thought.
• Privatization, deregulation, market
  liberalization, and emphasis on improving the
  long-run supply-side performance of the economy.

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• To improve the nation's economy the Thatcher
  government took the following measures
• (1) Privatization of some state-owned enterprises
  such as British Aerospace, British Petroleum and
  British Airways
• (2) Deregulation and market liberalization to
  replace prices and incomes control and state
  intervention
• (3) Establishment of labor legislation to improve
  industrial relations
• (4) Reform of taxation to stimulate private
  investment
• (5) A tight control on the exchange rate and the
  regulation of money growth
• (6) A firm fiscal policy to reduce public
  borrowing.

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• Features of Economic recovery
• length ,by 1988 the recovery had lasted 7 years.
• The improved financial position of the
  government, with stronger current account of the
  balance of payments.

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Resources

• Coal
• considerable reserves of coal
• different type of coal
• important in the Industrial Revolution
• Why is British coal mining called a sick
  industry?
• Which area is rich in deposits of coal in central
  England?

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• Today British coal mining is called a "sick"
  industry. Other countries have developed coal
  mines of their own, and the demand for British
  coal has declined. Petroleum, water power, and
  electric power are replacing coal for many
  purposes. The old British mines are narrow and
  deep, making it difficult to use machines for
  mining. American, French, and German mines have
  pushed ahead of the British by using labor-saving
  machinery. These countries now can produce far
  more than the British miners can using
  traditional methods.

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Oil and natural gas

• When and where was natural gas discovered in
  Britain?
• When and where was oil discovered in Britain?
• Can Britain be self-sufficient in oil?

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• Oil and natural gas
• In 1965, natural gas was discovered under the
  North Sea.
• In 1970, oil was discovered under the North Sea
• self-sufficient in oil, a surplus for export.

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Iron and steel

• Which area used to be the centre of industry?
• What happened to this area?
• How is Britains steel industry?

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• iron ore and coal rich in central England ( the
  Midlands)----the center of steel industry
• the steel industry is declining.
• In 1967, the British iron and steel industry was
  nationalized. Under Mrs. Thatcher it was
  denationalized again.

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Industries

• Textiles (wollen, cotton, sythetic fabric)
• Which areas are the main textile producing
  regions of Britain?
• How is Britains textile industry now?

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• textiles center the East Midlands, Yorkshire,
  Humberside, Northern Ireland.

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• Five reasons behind the decline of Textiles
  Industry.
• Competition from foreign producers.
• Cheaper imports of textiles to Britain.
• Poor and outdated management decisions.
• Human-made fibers
• Mechanization led to improvement of output per
  worker.

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Shipbuilding

• Whats Britains position in shipbuilding during
  the middle of the 19th century?
• How is todays shipbuilding?

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• Shipbuilding
• in 19th century, a world leader.
• Centers Newcastle and Glasgow.

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Motor vehicle

• Where was the motor vehicle industry developed?
• What are the four firms that dominate Britains
  motor industry?

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• In the West Midlands, south-east England,
  Liverpool and Merseyside region, south Wales and
  central Scotland.
• Four famous firms Ford, the Rover Group,
  GM-Vauxhall, and Peugeot.

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New industries

• What do new industries include?
• Which area is often called Silicon Glen?

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New industries

• Home of Silicon Glenmicroprocessors and
  computers biotechnology
• High-tech, software and Internet companies dot
  the landscape between Edinburgh and Glasgow.

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Agriculture

• What characteristics does British agriculture
  have?
• How do British people increase the efficiency of
  their farming?
• What are the main farming types in Britain? Where
  are they best suited Britain?

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Agriculture

• Changes in British farming
• intensive farming, mechanization, farming
  methods
• Six Farming types in Britain
• 1. arable farming, 2. dairy farming, 3. stock
  farming, 4. mixed farming, 5. hill farming and
  6.market gardening.
• The fishing industry good fishing grounds in
  North Sea.

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• Many British farmers practise mixed farming--that
  is, they raise a variety of crops and animals.
  Methods of mixed farming vary from farm to farm.
  In the rough highlands of Scotland, Wales, and
  western England, grass grows much better than
  farm crops. There, farmers use most of their land
  for grazing. The land in southern and eastern
  England is drier and flatter, and it is more
  easily worked. Farmers in eastern England use
  most of their land for raising crops.

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Foreign Trade

• Importance of foreign trade
• 17th century, a major trading power, the fifth
  largest, and Napoleon called it a nation of
  shopkeepers.

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• Trading Partners
• with developed countries, 79 of exports and 85
  of imports
• In 1972, ½ of the trade is with the EC.
• Invisible Trade
• Services tourism banking sea transportation
  and civil aviation telecommunication and post
  services films and TV expenditure by foreign
  students and international organizations
• What is the City of London?

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• London grew up around two old, historic
  cities--the City of London and the City of
  Westminster. The City of London started as a
  trading post of the Roman Empire about AD 43. The
  City of Westminster began as a residence for
  England's rulers about 1,000 years later. It
  stood about 3 kilometers southwest of London. A
  great stone wall surrounded the City of London.
  But as London grew, it spread far beyond its wall
  and took in the royal City of Westminster. Today,
  the area where Roman London stood is still known
  as the City of London. It and the City of
  Westminster lie at the center of modern London
  and make up much of its busy downtown section.
  Large financial organizations such as the Bank of
  London, the Stock Exchange and Lloyd's (a famous
  insurance company) are located there.

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