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Historically and economically illiterate.
Let's take a look at what the 1920s was like in the UK - as it seems that many of the issues aren't entirely unrelated to the context of Brexit...
Let's take a look at what the 1920s was like in the UK - as it seems that many of the issues aren't entirely unrelated to the context of Brexit...
The 1920s are sometimes referred to as the âroaring twentiesâ, but for the UK economy, it was a period of depression, deflation and a steady decline in the UKâs former economic pre-eminence.
The UK, tied to the gold standard, the economy experienced a decade of deflation and stagnant growth.
After the post-war boom of 1919-20 ended, UK unemployment rose sharply to over 10% and stayed high until the Second World War.
After the post-war boom of 1919-20 ended, UK unemployment rose sharply to over 10% and stayed high until the Second World War.
Postwar, UK industries struggled to make the same productivity gains as competitors such as the US. British industries, which had performed well in the nineteenth century, such as cotton, steel, coal and iron faced difficulties from global oversupply and falling prices.
There was a sluggishness in switching resources from these old industries to new growth industries like chemicals, rayon and motor cars. Other supply-side factors included a cut in the average working week and industrial unrest.
Deflation discouraged consumer spending and increased the burden of debt.
A big feature of the UK economy in the 1920s was a desire to maintain the value of Sterling at its pre-war level of $4.86. This was partly a political move â the feeling a strong Pound was a key feature of Britainâs past economic success.
Between 1918 and 1920, government spending was cut by 75 percent. The government ran primary budget surpluses for most of the 1920s.
A sad fact about the 1920s was that despite the contractionary fiscal policy, the government failed to make a significant indent on the national debt as a % of GDP.
Throughout the 1920s, the UK ran primary budget surpluses (excluding interest payments, tax revenue was greater than government spending). Yet, despite these efforts at fiscal austerity, national debt as a % of GDP was stubbornly high.
This has interesting parallels today (i.e Austerity) because the UK experience shows that cutting spending during a deflationary recession (combined with tight monetary policy and fixed exchange rate) can be counterproductive to reducing debt burdens.
Post-1920, the UK experienced industrial stagnation. This was particularly marked in the UK coal industry. The declining industry led to lower wages and increasingly bitter trades disputes.
In 1926, this culminated in a general strike. The miners went on strike for better pay and conditions, and were joined by some other trades unions. However, the general strike was only partial and led to the defeat of the miners.
Growing isn't enough if other are growing faster:
Labour productivity (1913-1950) rose by 59 percent in the UK. The United States and Canada did better (output per worker in these two countries rose by 77 percent and 67 percent),
Labour productivity (1913-1950) rose by 59 percent in the UK. The United States and Canada did better (output per worker in these two countries rose by 77 percent and 67 percent),
At the end of the day, do we really want a return to much of what is listed above?
Firstly, it wasn't a boom (for the UK), secondly it really want that great a time.
Source: https://www.economicshelp.org/blog/5948/economics/uk-economy-in-the-1920s/
Firstly, it wasn't a boom (for the UK), secondly it really want that great a time.
Source: https://www.economicshelp.org/blog/5948/economics/uk-economy-in-the-1920s/
But - that was just one decade. After that it got better right?
TLDR, not really (especially in the industrial heartlands) although London and the surrounding areas did kind of ok. One again the are a few parallels with where we are now.
TLDR, not really (especially in the industrial heartlands) although London and the surrounding areas did kind of ok. One again the are a few parallels with where we are now.
After experiencing a decade of economic stagnation in the 1920s, the UK economy was further hit by the sharp global economic downturn in 1930-31. This lead to higher unemployment and widespread poverty.
However, although the great depression caused significant levels of poverty and hardship (especially in industrial heartlands), in parts of the UK (especially London and the South East), there was a mini economic boom with rising living standards and prosperity.
The stock market crash of 1929 precipitated a global recession. The US was particularly badly affected by the stock market crash because of the growth in credit in the years leading up to it.
The UK was more insulated because it had experienced no real credit boom in the 1920s.
If you are already doing badly you've got less distance to fall...
If you are already doing badly you've got less distance to fall...
The UK was already in a prolonged economic stagnation of low growth. Because the UK economy relied heavily on trade, the decline in global demand, hit the UK economy, and with lower exports, the UK economy went into recession.
The rates of economic growth from 1934 onwards look relatively impressive. There was also a significant fall in the unemployment rate from 15% in 1932 to 8% in 1936. However, the great depression was only partly averted.
Certain regions of the UK were badly affected, especially in Wales, the north and industrial areas. In certain areas, regional unemployment rates were cripplingly high, with few employment prospects.
It was this economic hardship which motivated the famous âJarrow Crusadesâ of unemployed workers marching to London.
Source for the above.
There's a lot more detail than that, but it was a mixed bag. If anything, the rich got richer and the poor got poorer. The divide in the country increased.
Many post Brexit forecasts are not that dissimilar to this. https://www.economicshelp.org/blog/7483/economics/the-uk-economy-in-the-1930s/
There's a lot more detail than that, but it was a mixed bag. If anything, the rich got richer and the poor got poorer. The divide in the country increased.
Many post Brexit forecasts are not that dissimilar to this. https://www.economicshelp.org/blog/7483/economics/the-uk-economy-in-the-1930s/
