Introduction

The early 1990s provides an interesting vantage point from which to view Britain's post-war economic recovery. Both the events and the historiography of the recent past have led to revisions of earlier accounts of the period and there is a much richer literature to survey than was true ten years or so ago. Although the electorate was informed by the Prime Minister, Harold Macmillan, in 1959 that they had never had it so good and duly returned the Conservatives with a large majority, the predominant theme of this chapter is the continuing relative economic decline of the UK in the early post-war period. The performance of the British economy during the years 1945–60 was very respectable in terms of inflation and unemployment but disappointing with regard to productivity and output growth.

Several distinctive features of the UK post-war position shaped the context of economic performance and should be kept in mind.

1. i) The prevailing imperatives of post-war macroeconomic policy were to cope with an horrendous balance of payments position (Cairncross, 1985) and a formidable monetary overhang (Eichengreen, 1993).

2. ii) The Labour Party was elected in 1945, having “won the war at home” (Addison, 1975) on a program of much expanded social welfare provision and nationalization of the commanding heights of the economy. The Conservatives on returning to power in 1951 deemed it electorally prudent not to reverse these policies.

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