The changing international and economic context; From Empire to EEC application in five years. Flashcards
The economics of Britain after the war
- Britain emerged from WW2 with enormous debts, mostly incurred through borrowing money from the USA.
- In 1945 alone, Britain borrowed $3.75 billion from the USA. A condition of this loan was that sterling must be freely convertible with the dollar by 1947.
- In effect this would open up imperial markets to the USA.
- The Cold War demanded high levels of defence spending.
- Britain to reduce costs through decolonisation.
However, Britain did not experience a wave of decolonisation despite the crises in India and Palestine in 1947-48.
-Between 1948 and 1960, only 3 British colonies gained their independence. These were the Sudan (1956), the Gold Coast (1957) and Malaya (1957). [Britain adopted a policy of colonial economic efficiency with a view to tightening its economic links with Empire.]
Post-war European military integration
Under Attlee the British government felt that Western European states could primarily be used for mutual defence
- 1947 Dunkirk Treaty – Britain and France signed a defence co-ordination agreement for mutual security. This was a reaction to the growth of Soviet power in central Europe.
- Stalin’s blockading of West Berlin and the communist takeover in Czechoslovakia led to the Brussels Pact (1948) with France and the Benelux countries.
- In 1949 this was expanded by the USA to found NATO.
Britain and post-war European Economic integration
- Whilst the Labour government resisted US moves to get them to abandon Empire and focus solely on Europe, Bevin did act to create West European Unity.
- In 1946 Bevin Chaired the UN Economic Commission for Europe.
- Marshall Aid was offered by the USA, Britain , took the lead in organising the West European nations by founding and leading the Organization for European Economic Co-operation (OEEC), 1947
- Bevin was also central in the formation of the European Payments Union in 1948.
Did Britain miss the boat
The European coal and steel treaty was signed in 1951.
This created a free-trade zone between France, the FRG and the Benelux countries for these two products.
Britain did not sign but it did send a delegation to Luxembourg to act as British representatives to the signatories.
Changes in Britain’s trading patterns post WW2
A key issue was the reordering of Britain’s trade and investment patterns.
In 1950, the proportion of British exports going to the Commonwealth stood at 47.7%. 1960 - 40.2%.
There was a comparable decline in imports from the Commonwealth from 41.9% of Britain’s total in 1950 to 34.6 % in 1960.
- In addition to this, it was clear by 1960 that the British manufacturing industry lacked competitiveness in terms of price and quality. Britain’s share of world trade continued to decline and competition from West Germany and Japan was damaging.
- The Suez Crisis also did immense damage to the British economy and was definitely a turning point in both economically and politically.
Was post WW2 Britain in a ‘Golden Age’?
Living standards rose steadily – the level was consistently higher than it had been from 1900-39.
- Unemployment averaged around 2%
- Britain maintained a very high level of defence spending – around 7% of GDP in 1955.
Barnett’s theory about Britain post WW2
Britain’s economy was in long-term decline
- Post-war growth rates were high from 1948-64 but it was an artificial environment.
- West European rivals and Japan were only just starting to rebuild their export markets. This meant that Britain was able to maintain a healthy export sector throughout the period.
- As a result of this ‘growth’ neither the Labour nor Conservative governments of the period invested in updating industries or in infrastructure.
in 1951 Britain’s share of world trade stood at a quarter, by 1975 it had dropped to a 10th.
The British motor industry post WW2
In 1950 75% of British car production and 60% of its commercial vehicle production was exported.
In 1950 the UK provided 52% of the world’s exported vehicles.
- By 1952 the American owned producers in the UK (Ford and GM’s Vauxhall) had between them a 29% share of the British market.
- German production was increasing yearly, and by 1953 it had exceeded that of France, and by 1956 it had overtaken that of the UK.
- By 1955 five companies produced 90% of the UK’s motor vehicle output: BMC, Ford, Roots, Standard-Triumph and Vauxhall.
- By 1966 the UK had slipped to become the world’s fourth largest motor vehicle producer.
The 1956 crisis
The 1956 crisis - Nasser wanted to construct a huge dam on the Nile River in the south of Egypt at Aswan. This, it was hoped, would help to facilitate Egypt’s economic development.
- On 19th July Dulles informed Nasser that the US would not provide a loan for the building of the dam – this was in response to Nasser’s receiving of Soviet emissaries in Cairo earlier in the year.
- Nasser had wanted to nationalise the Suez Canal since he had come to power, but this gave him the opportunity – it was a gamble which he took and on 26th July nationalised the Suez Canal.
The reaction to the 1956 crisis
Eden planned to invade the Canal Zone, and place it under ‘international control’, and then to topple Nasser.
- From the start much of the Commonwealth was against military action: India, Pakistan, and Canada were all against.
- Australia and NZ were hesitantly loyal.
- There was still a significant body of public support, and in particular, among the Conservative Party that felt that: ‘The only way to deal with Orientals is to kick their backsides!’
- Unable to find a favourable result via diplomacy, Eden gave Operation Musketeer the go ahead on 5th November 1956.
The reaction in the UK to the 1956 crisis
- The opponents of the Conservatives called them ‘fascists’ and ‘murderers’, whereas Labour was simply full of ‘cowards’ and ‘appeasers’
- The middle class newspaper The Observer declared that: ‘Never since 1783 has Great Britain made herself so universally disliked.’
The international reaction to the 1956 crisis
- The crisis effected the pound, which caused an economic crisis in Britain. Britain appealed to the IMF for a loan – the USA refused. Only if Britain withdrew from the Canal Zone would the money be given.
- The British and French forces were forced into a humiliating withdrawal. On 10th December 1956 the USA gave $1,300 million to Britain’s.
- IKE later reflected that this was his greatest mistake in foreign policy as President.
Aftermath of the 1956 crisis
Suez was a fatal blow to British prestige, and some historians, among them Niall Ferguson see it as a key turning point in the collapse of the Empire.
- The Conservative government continued to focus on tropical and sub-tropical Africa, and their attempts to create white dominions there, but the Middle East was increasingly dominated by the Americans. Britain did maintain a military and colonial presence in Aden and Bahrain until the 1960s but its role was increasingly peripheral.
- In 1957, the French created the European Economic Community (EEC), by the Treaty of Rome. This created a huge free-trade zone of the ‘inner’ countries: France, Belgium, Luxembourg, the Netherlands and West Germany. The French felt that after Suez, domination of Europe was the only way for them to remain a major power. Britain distanced itself from the new community.
- GB and France were obsessed with ‘third power role’, Highlights UK dependency to America, Checked with America on action, EEC Meant specifically to be French dominated.
