The seventies

The Tory Government of 1970-4, faced by the same problems of a low growth rate, high trade deficits, spiralling inflation and high wage claims backed by numerous strikes, attempted the same cure of a prices and incomes policy. The situation was made impossible, however, by the massive increase in oil prices following the Arab-Israeli war and a work-to-rule by the coal-miners in 1973. The country came to an almost complete economic standstill, as electricity could only be supplied to industry for 3 days a week. The only high point in this period of gloom was Britain's entry into the EEC on January 1, 1973 (a decision confirmed 2:1 by the electorate in a subsequent referendum).

After Labour’s return to power in 1974, the Government attempted to tackle the severe economic situation through massive cuts in defence spending, but it was not until the International Monetary Fund began a rescue operation at the end of 1976 that a dramatic recovery got underway. This recovery was also due to the high levels of oil production reached in the North Sea.

Exercise 17. During the 1960s and 1970s, Britain was faced by two major problems: its continuing loss of influence in world affairs, and the economy. What solutions were attempted for these problems?