The British Economy Recession - Essay Example

 The British Economy Recession Foreword: This research paper analyzes the reasons of the British economy recession in 20th century. Thesis: During the whole 20th century there were three main reasons of the country’s decline that could be named. In 1901 with the death of Queen Victoria the United Kingdom was on the threshold of the new economically developed era. While the USA and Germany were developing greatly the UK was still lagging behind in its manufacturing and economic indicators. During the whole 20th century there were three main reasons of the country’s decline that could be named. The first reason refers to the very beginning of the century and is connected with World War I. In the sphere of the world manufacturing the USA and Germany occupied the first place. They were intensifying their turnover in military and agricultural production. It can be explained by the fact that these countries have more favorable natural resources than the UK. Up to World War I Germany had been following its own policy of imperialism and that is why it nearly stopped any relations with the UK. Despite the above mentioned facts the UK was still doing not very badly. The War ruined all spheres of the UK industry. It did destabilize the British economy for a long period of time. The plants and factories both in town and in the suburbs were regularly bombarded and eventually in lead to the decline of the UK economy. Participating in the War made the UK lose the quarter of the country’s wealth. The decline of manufacture brought about the total unemployment and strikes of complaints. The unemployment was spread among women and those men who were not involved in battles. Those enterprises that were not ruined closed down because they even didn’t cover their expenses. People in those times didn’t have money to develop the majority of branches of the manufacture. The only spheres that managed to survive and even got some profit were the food manufacture and the military one. During the War these products became of prime importance. Although, the manufacture in the UK was in recession, London still played the role of the world main financial centre. I accumulated the accounts dealing with military forces and other spheres. For performing the function of the World Bank the UK, surely, charged the percentage and that donation allowed it to proceed participating in the battles. People unsatisfied by the political and economic situation united in General Strike that aimed to demand the increase of the standards of living. The authorities managed to suppress the Strike and those people who participated in it were blacklisted and could not be hired for very long after the strike. The next reason that brought about the decline of the UK economy was the Great Depression that took place not only in the UK but also in the USA and many European countries during 1929-1939. At the beginning of this period the UK was forced to abolish the Gold Standard. With this innovation the UK began to organize the free market both in the domestic market and in the foreign one. In 1930 the government introduced the Tariff Reform to provide the protectionism of the domestic economy. At the beginning of the 40-s the country underwent the first impact of the depression. The Labour Market of the UK failed and it was substituted for the Department of the National Government. It is to be mentioned that the Great Depression influenced negatively and destructively the majority of the European economies with its worst impact on Germany. The economic problems were sure to cause the political ones. “In Britain this was seen with the rise of the Communist Party of Great Britain (CPGB) and the Fascists under Oswald Mosley” (Floud & Johnson 2004). Nevertheless, they did not possess any wide power and they were just the form of people’s view organization. It never represented any threat to those in power. The great Depression affected all spheres of the national economy. The income of citizens was reduced fourfold and the most precious goods in the UK became wheat or any other cereal. People also needed weapon, since the Great Depression increased the rate of crimes in several times. And the last reason to be mentioned is World War II. The greatest tragedy in the history of mankind claimed thousands of lives not only in the battle field but also through famine and substandard way of life. The war broke out in autumn 1939 and it caused the inevitable negative effects during the next five years. “The British Government also decided to sell its gold reserves and dollar reserves to pay for munitions, raw materials and industrial equipment from American factories” (Daunton 1995). By 1940 the export and import operations decreased by 40% compared to 1935. The UK still had some state orders from the USA, France and Russia, but it did not cover even the quarter of its expenses. There was something to be done about the whole economic situation in the country and that is why in 1941 the American Government introduced a new set of laws dealing with economic sphere. It was called “Act to promote the defense of the United States"” (Peden 1985). The USA that had very little losses during World War II was engaged to lend money to the UK with the condition of it being paid after the war. After the end of the war the economy of the UK required 10 years to adjust the peaceful manufacture. 99% of all plants and factories were reorganized during the war time to suit military needs. Now it had to be reversed. Because the developed European countries were totally devastated by the War the leading role on the world arena was taken by the USA with its perfect production and intact factories and plants. In order to improve the economy the British government decided to introduce the convertibility law that was to restore the manufacturing system of the country. Still the result was not successful and the country had to borrow money again from the USA. Since that time the economy of the UK developed relatively fast, speeding up the manufacture processes and fixing international relations. REFERENCES 1. Floud R.& Johnson P 2004, The Cambridge Economic History of Modern Britain, Cambridge University Press 2. Ruggie О. 1982, ‘International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order,’ International Organization pp. 379-415. 3. Peden G.P 1985, British Economic and Social Policy: Lloyd George to Margaret Thatcher . 4. Daunton M.J. 1995, Progress and Poverty: An Economic and Social History of Britain, 1700-1850 Oxford University Press Read More