The Affluent Society: Economic Developments (AQA A-Level History): Revision Notes
Post-War Boom
Economic recovery and the end of austerity
The Conservative government that came to power in 1951 benefited from favorable economic timing. Post-Second World War economic recovery was beginning to gather momentum across Western nations. The general pattern during the 1950s became one of sustained economic improvement.
The concept of post-war consensus refers to the broad agreement between major political parties on key policies including the welfare state, full employment, and mixed economy management. This consensus shaped British politics throughout the 1950s and early 1960s.
Food rationing (a wartime system that controlled food distribution based on nutritional needs to prevent prices rising beyond what ordinary people could afford) finally ended in July 1954. This marked the conclusion of wartime austerity measures. British citizens could now experience higher living standards than in any previous period.
The birth rate accelerated rapidly following the war. By 1961, Britain's population had reached 51 million, representing a 5% increase of approximately 2 million people compared to 1951. This population growth contributed to expanding domestic markets and increased labour supply.
Global trade expansion and employment growth
The global economy experienced substantial growth as nations rebuilt after the war. This recovery produced a sustained increase in overseas trade, generating high earnings from exports and investments. Combined with rising domestic demand, these conditions created plentiful employment opportunities.
By 1955, Britain had effectively achieved full employment. Only 200,000 people remained unemployed, representing less than 1% of the workforce. This represented a remarkable transformation from the mass unemployment of the interwar period.
Full employment is generally defined as unemployment below 3%, but Britain achieved an exceptional level of under 1%. This was considered a major achievement for post-war economic policy and a stark contrast to the mass unemployment of the 1930s.
Employment patterns underwent substantial transformation during this period. Traditional occupations including agriculture, fishing, coal mining and shipbuilding experienced declining numbers. However, these losses were offset by considerable expansion in electrical and engineering work, alongside industries connected to cars, steel and other metals.
Service industries experienced particularly impressive growth. These ranged from financial and professional services through to transport and sales. By 1960, approximately 5 million people worked in service industries. This represented roughly one in five of the total population and similar numbers to those employed in heavy industry.
Rising wages and living standards
Economic growth combined with low unemployment generated rising wages across the economy. Most workers experienced substantial increases in their income. In the period before the 1955 election, Chancellor Rab Butler implemented a 'give away' budget that provided the middle classes with $134 million in tax cuts. People felt more affluent, leading to growth in consumerism.
Britain's terms of world trade improved markedly during the later 1950s. By the decade's end, Britain could import approximately 29% more goods than it had in 1951 for the same volume of exports. This improvement in trading conditions reflected Britain's strong economic position.
Terms of world trade refers to the ratio between export prices and import prices. An improvement means a country can buy more imports with the same quantity of exports, effectively increasing purchasing power on international markets.
Britain achieved a higher income per head than any other major country except the United States. However, this aggregate figure concealed the reality that Britain's growth rates fell short of those achieved elsewhere.
Comparative economic performance
Industrial production across major economies showed varying rates of expansion between 1952 and 1959 (using 1950 as a baseline of 100):
| Country | 1952 | 1955 | 1957 | 1959 |
|---|---|---|---|---|
| West Germany | 126 | 179 | 204 | 225 |
| France | 110 | 131 | 156 | 170 |
| Italy | 117 | 153 | 177 | 202 |
| Netherlands | 103 | 134 | 143 | 158 |
| USA | 111 | 124 | 127 | 133 |
| UK | 101 | 121 | 123 | 129 |
Understanding Industrial Production Figures
These figures use 1950 as a baseline of 100. For example:
- West Germany's 1959 figure of 225 means production was 225% of 1950 levels
- This represents a 125% increase over nine years
- Britain's 1959 figure of 129 shows only a 29% increase over the same period
- West Germany's industrial output more than doubled whilst Britain's increased by less than one-third
These figures demonstrate that whilst British industrial production did grow during the 1950s, the rate of increase lagged considerably behind continental European competitors, particularly West Germany and Italy.
Britain's share of world trade also declined relative to other nations during this period:
| Country | 1950 | 1951 | 1959 | 1962 |
|---|---|---|---|---|
| UK | 25% | 22% | 17% | 15% |
| USA | 27% | 26% | 21% | 20% |
| West Germany | 7% | 10% | 19% | 20% |
| Japan | 3% | 4% | 7% | 7% |
Britain's Declining Trade Share
This data reveals a substantial decline in Britain's trading position, falling from a quarter of world trade in 1950 to just 15% by 1962. Meanwhile, West Germany's share nearly tripled during the same period, rising from 7% to 20%.
This relative decline occurred even though Britain's absolute trade volumes were growing. The problem was that Britain's competitors were growing much faster.
Productivity (the efficiency achieved through greater output per worker, per shift, per hourly wage) comparisons for 1960 showed British workers producing approximately 125 units compared to a 1950 baseline of 100. German workers achieved around 159 units whilst French workers reached approximately 177 units. This productivity gap helps explain why other nations experienced faster economic growth despite Britain's own improvements.
The late 1950s context
The late 1950s represented years of optimism for many British people. They enjoyed increased employment opportunities, higher earnings, improved access to goods, enhanced housing conditions and expanded welfare state provisions. Adults who had endured wartime deprivation suddenly possessed money to spend on cars, new appliances, luxuries and entertainment. The younger generation, growing up surrounded by plenty and unaware of past shortages and fears, sought to enjoy life fully.
Key Points to Remember
- Food rationing ended in July 1954, marking the transition from wartime austerity to improved living standards
- Full employment was achieved by 1955 with unemployment below 1%, whilst service industries expanded to employ 5 million workers by 1960