What Hope for Britain’s Economic Recovery?
By “Awake!” correspondent in the British Isles
“THE sick man of Europe seems to have become even sicker overnight,” wrote the Austrian Kurier on the outcome of Britain’s recent general election. Strong words these, but few will deny that Britain has had severe economic sickness for some time. How did this arise, and what does the future hold for her?
Island home of fifty-four million people, Britain is largely a manufacturing country. She imports about half her food, besides much raw materials. Payment for these must be made by exporting at least the equivalent value in her own products and services. As with a family, so with a government, failure to pay one’s way results in financial sickness, debt and possible ruin. Britain has faced a series of economic crises since World War II, through a fairly consistent failure to balance her budget and pay her way. The latest British economic crisis has been easily the most serious of all, due to a variety of factors.
Crisis Background
Although the British have learned to live with crises, few were prepared for the suddenness and impact of this one. The summer of 1973 saw full employment throughout the land, as the Conservative government went all out for economic growth, assuring the people that the way out of their problems was just ahead, provided there was wage restraint to keep down the price of the goods that Britain must sell abroad. Autumn 1973 saw the introduction of the third stage of the government’s wage policy to keep increases down to a permitted percentage. It was soon clear, however, that major unions were unwilling to accept this restraint. They claimed that prices were rising much faster than wages and that their standard of living was falling. Prices were, indeed, rising fast, as every housewife knew. The cost of food again rose in January 1974, 2.9 percent, after having risen 20 percent in the previous year; 53 percent since the government took office in 1970.
Coal miners, train drivers, engineers, all had large wage claims in the pipeline—bigger than government policy allowed. It was evident that Britain was heading for a familiar winter pattern of industrial action.
Oil Muscles In
Then, an entirely new factor appeared on the scene—one that was to have a very powerful influence. Oil!
The Arab oil-producing countries announced that they would use oil as a political weapon. Production would fall, prices would rise. This new oil policy sent shivers through the shaky British economy.
British industry had been closely geared to cheap oil since World War II. Industrial production and transportation are almost entirely dependent on oil. It heats many homes and most factories. A massive increase in oil prices could wreck the British economy.
Shortages of oil followed, but not disastrously. Prices, however, were a different matter. By January 1974 the price of crude oil had increased by 400 percent and further increases were promised by the Middle East oil sheiks. Although the price of petrol for cars and diesel fuel for trucks has increased by 20 percent and heating oil by 75 percent, the full impact of oil price increases has not yet hit the British economy. Its grip will no doubt be felt with increasing power in the months ahead, as the prices of all goods produced or transported by oil power increase. Oil imports alone will cause a balance-of-payments deficit of some £2,000 million ($4,600,000,000) this year.
Energy Crisis Grips Britain
As autumn paled into winter, the oil problem and the miners’ dispute brought an energy crisis that gripped Britain in a nutcracker.
By the middle of November the miners banned all overtime working, cutting coal production by 30 percent. With coal as the source of 60 percent of the power, and oil supplying most of the rest, the outlook was bleak for Britain on the energy front. A complete power failure seemed a possibility to the government. Just two years earlier, resolute and united action by the miners in a seven-week strike had forced the government to capitulate. This time the government was determined to hold fast to their incomes policy and not give way. The miners were just as resolved to achieve their wage increase.
Stern Measures to Conserve Power
By early December the oil supply was uncertain. Petrol ration coupons were issued. Rumors were rife that rationing would start in the new year. Appeals were made to motorists to cancel unnecessary trips; countrywide speed limits were reduced from 70 to 50 miles per hour. Shortages increased and long lines of cars formed at filling stations, which quickly sold out and closed down. Petrol-hunting became a fact of life for many road users.
In this atmosphere of uncertainty and foreboding, the nation waited for the government to shine a light. Prime Minister Edward Heath decided that stern measures were needed to conserve coal stocks at the power stations. Industry and commerce were to be put on a three-day workweek from January 1, 1974. Strong appeals were made for economies in domestic consumption. People were asked to heat only one room and to use less lighting. New meaning was given to the distress signal SOS by the coining of the slogan “Switch Off Something.”
Industry was hit hard, but a new spirit of cooperation between employers and workers emerged. Employers, on the one hand, were anxious to keep their companies from bankruptcy, while workers, on the other, wanted to preserve their jobs. Although power was cut to 60 percent of normal, many industries, by ingenuity and united effort, managed to maintain production at 70 percent and more. Of course, workers suffered loss of wages; and employers, loss of profits. Hundreds of thousands of workers were laid off for two days each week. Visible signs of the energy crisis were evident as street lighting was cut in many places by 50 percent. Darkened streets called to the minds of the older generation their memories of blacked-out wartime Britain. Although Britain seemed to be digging in for a siege, it was a siege no one really wanted.
Opposing Views Harden
Discussions between the government and miners dragged on from December through January. Mr. Heath remained adamant that no settlement could be made outside his incomes policy. The miners were equally adamant that their claim must be met. The hard, dangerous, health-destroying nature of their work, they said, justified their claim. Since rocketing oil prices now made coal look cheap by comparison, it was clearly a most favorable time to press their claim.
During January, speculation gained ground that the government would seek a solution by calling a general election. The miners refused to share in any more discussions unless there was “more money on the table.” The government still sought a solution in talks with the Trades Union Congress and the Confederation of British Industry. But these talks were denounced by the opposition Labour party as mere political maneuverings in preparation for an election, moves designed to show the government in a favorable light, the miners as obstructive militants.
The Crunch
Although the energy crisis had been mitigated by a mild winter, another crisis was now looming—the steel crisis. Coal stocks at the steel mills were rapidly disappearing and production was falling, with the prediction of a complete shutdown by April. So, although industry might have enough power to work three days a week, it would soon be brought to a standstill by the lack of steel.
The crunch came for the government when the miners, dissatisfied with the lack of results from their ten-week overtime ban, voted, by a massive majority of almost 90 percent, to call an all-out strike from midnight on February 9. Unable to concede the miners’ claims, due to his devotion to his incomes policy, Mr. Heath called for a general election on February 28.
The Campaign
The Conservatives (Tories), led by Heath, campaigned under the slogan, “Who Rules Britain?” They claimed that militant union extremists were bent on imposing their will on the nation in defiance of Parliament. Heath asked the country’s voters to return him to power with a strong majority in Parliament, to give him authority to deal with the problem of inflation.
His Labour Party opponents, led by Harold Wilson, lost no time in calling it a phony election, telling Mr. Heath that, in spite of a working majority in Parliament since 1970, he had signally failed to deal with inflation. They castigated his campaign against union militants as a “Reds under the bed” campaign meant to scare the unwary into line.
Throughout the three-week campaign an endless stream of opinion polls consistently put Heath’s Conservatives in the lead, with Labour a few percentage points behind. An unexpected element was the steady resurgence of the Liberal Party, which, after fifty years in the political wilderness, was shown to be gaining substantial support.
The Result
Accustomed to two-party politics for over forty years, the country expected one of the “big two,” Conservative or Labour, to gain its customary clear-cut victory. There was great surprise when it became clear that no single party would gain a majority. Labour took 301 seats, a nose ahead of the Conservatives with 297. For the first time since 1931 no party could form an unchallenged majority government. Mr. Heath attempted a coalition with the 14 Liberals in the new Parliament, but resigned when he failed to gain their support.
This opened the way for Mr. Wilson, on March 5, to form Britain’s first minority government in over forty years. The first priority was the settling of the miners’ dispute to open the way for a return to full-time working. Freed from the previous government’s incomes policy, talks between the Coal Board and miners’ union bore fruit within two days. The miners received most of their demands; the three-day workweek ended at midnight, March 8. All Britain sighed with relief.
Outlook
What had the election achieved? Was the way now open for a speedy recovery from Britain’s economic sickness? Most observers say, No. The electors had clearly rejected Mr. Heath’s policies. On the other hand, they had not given a mandate to Mr. Wilson. Over six million, 20 percent of total voters, had supported the Liberal Party, indicating their disenchantment with both major parties.
European countries viewed the result with dismay. “A Government with a tiny majority cannot demand from the country the sacrifices needed to master the situation,” said Le Figaro of Paris. “The results could scarcely have been worse,” was the comment of the Frankfurter Allgemeine Zeitung. Italy’s Il Giorno declared that “the mysterious malaise of England” was now not only economic but institutional.
British newspaper comment also viewed the future somberly. Said the Daily Express: “Whoever is chosen to lead Britain from today on may permit himself a few hours savouring his success. . . . Confronting him is a list of problems unprecedented in postwar years.” The Sunday Telegraph forecast a gloomy economic future. It noted: “On one issue there can be no doubt, namely, that all parties have stressed the desperate plight of Britain’s economy and the need for belt-tightening and sacrifices all round.”
Britain’s desperate economic problems are not unique. They can be seen in many nations the world around. The solution does not lie in the hands of politicians or economists, earnestly though they try. The world’s insurmountable problems were long ago foretold by Jesus Christ. He said the nations would ‘not know the way out’ and men would become “faint out of fear and expectation of the things coming upon the inhabited earth.” (Luke 21:25, 26) But the Bible does show the way out. If you are one who longs for an end to economic and other crises, why not turn to its words of guidance?