Changes in the UK During the 1970's

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The 1970’s was a turbulent period for the UK. High levels of inflation, an increase in oil prices due to conflict with the Middle East, and failing nationalized industries was crippling the once world power (Smith, 2010). The Labour party’s reign in parliament ended with the election of the Conservative party in 1979. Margaret Thatcher was elected as prime minister and a significant shift in economic policy was soon to follow. I initially decided to choose the time period between the late 1970’s to the mid 1980’s because of the significant increases in financial flows, shift in trade patterns and the changes in the GDP growth rate. The data provided allowed for foundation for policy change speculation. Once I narrowed down data which seemed to make the most significant changes, I was then able to research why these changes may have taken place.

During this time the North Sea Oil Company was banking large revenues from the high oil prices. North Sea Oil Company developed 18 new oil fields between 1967 and 1974, and by the year 1984, “the UK was producing 2.65 million barrels (of oil) per day, making the UK the world’s fifth-largest oil producer” (Money Week, 2005). Our data provided in class shows the UK increased the percentage of fuel as an export from 6% in 1978 to 10% in 1979, and did so after until it reached 22% of all exports in 1983. Fuel remained a large percentage of exports until the late 1980’s. Subsequently, fuel as a percentage of imports fell off from a high point of 18% in the late 70’s to a low 11% in 1983; virtually making the UK energy self sufficient. The policy changes surrounding the windfall of oil revenues pushed the UK out of economic trouble.

In October of 1979 the UK lifted exchange controls which all...

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...on and abolition of exchange controls allowed UK to spend large amounts of finance on foreign assets, further developing one of the world’s largest financial institutions. Two, in addition to outward flows of investment, inward flows emerged creating a slight current account deficit, and thus balancing the current accounts. Finally, and most important the rising oil costs and following political moves created the right conditions for a successful implementation of the Conservative Party’s austere economy. The beginning of the period inflation was at 14% and by the end of the period (1984) inflation had a rate of 5%, and continued to decrease into the next decade. Across all data, the health of the country continued to rise out of this period; GDP growth rate, trade in the current account and investments in the financial account all continues to rise to present day.

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