Introduction

After a rocky start to its membership in the European Union, the United Kingdom has gradually moved up from being the fourth largest economy in the European Union to being the second largest by 2004. Throughout its erratic relationships with the European continent since the end of World War II, the United Kingdom has had a different perspective on economic policies from the majority consensus within the European Union. While taking the lead in organizing a European response to the Marshall Plan initiative in 1948, it was a reluctant participant in the European Payments Union in 1950 and abstained entirely from the European Coal and Steel Community. When the European Economic Community was formed in 1958 it was the United Kingdom that took the initiative to form an alternative group, the European Free Trade Association. This comprised seven countries around the borders of the six founding countries, and was seen as a viable alternative to the future of European trade relations during the 1960s. (Now it has only Iceland, Liechtenstein, Norway, and Switzerland as members.) When the United Kingdom finally abandoned the EFTA group and joined the EEC in 1973 the Bretton Woods system of fixed exchange rates had finally collapsed, and then the oil shocks of the coming decade started in October 1973.

During the successive oil shocks of the 1970s the United Kingdom gambled on developing its own petroleum resources in the hazardous North Sea area, while the Continental countries attempted to strike long-term contracts with various exporting countries within the OPEC cartel.