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Britain annual compound growth rate was pretty high during 50s. But overseas competitors grew even higher. But things did not change in 60s, because
1. conservatives thouhgt they had solved the economy, so conselours were not experiences
2. Defence expenditure was too high, Britain thought they had still the power
3. Britain did not join the EC. City thought they were still leading the world. Conservatives opened up city. Foreigns came to London to avoid domestic taxes. City believed that the strong pound is essential for the economy. Interest rate was risen in any inflation.
Treasury identifyed 3 factors in external monetary position:
1. Pound value is very important in foreign policy
2. Existence and importance of UK overseas investment
3. Balance of payments was very important. So UK can live of from the surpluses of services.
There was analternative view, the view of Germany etc.
In 1961 the members of British Industrial Federation went to France.and started to question overnment policy. Outcome was the NEDIs - govn agencies planned the economy like Japanese.
So as government put breaks on the economy as son as slight overheating occured english trade cycle was very frequent and sharp. Big manufactures did not like it, so did not the trade unions.
So 3 conflicting parties - Treasury, City, Industry.
Industry concentration had risen. Few big firms. They became more politicised. They took foreign models quite seriously.
Reorientation of policy occured. New education system (more science). So in 1960s radical changes. But conservatives were incapable of doing all this, because they had strategies and policies. Labour formed the government in 1964. They redefined socialism. But the value of currency was not allowed to change.
Scientific reform with experienced non oxbridge civil service.
Problems:
1. Sterling was still controled by Treasury
The modernisation of England failed. Pound was devalued in 1967. Eurodollar markets started to develop, so city was becoming independent of sterling and domestic industry.
Labour failed and edward heath came to treasury and did a u turn. Managed to start labour control policies etc.