Economic History of The United Kingdom - 1945 To 1990

1945 To 1990

In the 1945 general election, just after the end of the war in Europe, the Labour Party was elected, introducing sweeping reforms of the British economy. Taxes increased, industries were nationalised, and a welfare state with national health, pensions, and social security was created.

The next years saw some of the most rapid growth Britain had ever experienced, recovering from the devastation of the Second World War and then expanding rapidly past the previous size of the economy. By 1959, tax cuts had helped boost living standards and allow for a strong economy and low unemployment.

By the end of the 1960s, this growth began to slow and unemployment was rising again. During the 1970s Britain suffered a long running period of relative economic malaise, dogged by severe inflation, strikes and union power as well as inflation, with neither the Conservative government of 1970-1974 (led by Edward Heath) nor the Labour government which succeeded it (led by Harold Wilson and from 1976 James Callaghan) being able to halt the country's economic decline.

Unemployment exceeded 1,000,000 by 1972 and had risen even higher by the time the end of the decade was in sight.

This led to the election of Margaret Thatcher, who cut back on the government's role in the economy and weakened the power of the trade unions. The latter decades of the 20th century have seen an increase in service-providers and a drop in industry, combined with privatisation of some sections of the economy. This change has led some to describe this as a 'Third Industrial Revolution', though this term is not widely used.