The Economy. From “You’ve Never Had it so Good” to Stop-Go.
Industrial Relations and Class
Years of Consensus ?
From Cultural Conservatism to Cultural Dissent
In search of a Scapegoat: immigration.
Foreign Policy: The Growing Irrelevance of the Three Circles.
From 1952 to 1964, Britain was dominated by a series of Conservative governments.
The 1951 elections were lost by the Labour party, which had run out of steam. The Conservatives had focussed their campaign on housing, one of Labour’s weaknesses, and promised 300 000 house a year. The first government was led by an ageing Winston Churchill, who, with some difficulty, led a government of much younger men. The following elections, in 1955 were again easily won by The Conservatives and Anthony Eden, of the war time generation , became the Prime Minister. He only stayed in office for two years, and had to leave after the ill fated military operation against Egypt, the Suez Affair. He was succeeded by Harold Macmillan, who had to face very serious challenges on the economic and social fronts, and who engineered Britain’s strategic shift towards Europe. In spite of winning elections in 1959, Macmillan resigned, and was replaced by Alec Douglas Home, who proved unable to resist the offensive of a modernized Labour Party, under Harold Wilson’s leadership.
1.The Economy. From “You’ve Never Had it so Good” to Stop-Go.
Britain was at the time one of the most prosperous European countries. The living standards of the population where higher than elsewhere, the standards of comfort of British homes were markedly higher, especially compared to Southern Europe, including France. In the British press , France was known at the time as a country without indoor toilets – and it was. Household appliances and articles – television sets, washing machines etc- were widely used. Unemployment was very low, sometimes purely frictional,( i.e. being out of employment for a few days or weeks between two jobs). IN 1959, The Conservative Party chose as its electoral catch phrase “You’ve Never Had It So Good”, meaning “you’ve never been so rich” - and won the elections. The psychological climate was therefore very different from the one prevailing in Europe since the I970’s. The chief reason for this was probably full employment.
Prosperity was due to a number of causes, which included the ”changes in the terms of trade”: the prices of raw materials and of oil, imported from the rest of the world, fell dramatically, while the prices of manufactured goods rose. For the developed world, this was one of the benefits of the world order dominated by the USA after the war, and including the Bretton Woods system as well as the new type of relationships with poor countries and former colonies. For the countries of the “South”, the benefits were more dubious. Britain was uniquely placed to make the most of this, since its industry had not been wrecked by the war, and could now work at full capacity. In a sense, the prosperity of Europe and of the USA contributed to the impoverishment of the rest of the world.
Besides, Fordism was in full swing, and productivity increased fast, since new scientific discoveries could be integrated into technology, and found their way into factories. The whole of British industry was gradually electrified, which boosted productivity, and, in turn, investment, wages, profits, tax returns etc.
At a fairly early stage, the government was able to complete successfully a massive housing programme, and to build over 300 000 houses every year. This was all the more spectacular since the Labour government had not been able to fulfil its pledge in this field. This was made possible by the relaxation of norms… and standards for public housing, and by the extension of housing subsidies to the private sector. The new houses and flats were smaller, insulation was minimal, and collective amenities were Spartan. A number of low quality high rise buildings were produced, in suburban housing estates which became a serious problem in the I980’s. However, at the time, new flats were welcomed by the homeless, even if the British have always preferred houses to flats.
In spite of those successes, problems were appearing. The Keynesian model of development was not without its drawbacks for Britain. Keynesianism was based on the idea that , in order to keep unemployment low and profits high, it was necessary to stimulate demand. This was done through a number of means: keeping interest rates low, so as to increase “Hire purchase” (or HP, i.e. buying on credit), keeping taxation low, so as increase people’s purchasing power, commissioning public works. Although it hasx not realized this, Britain was a small country, and its domestic industry could not meet the demand, and satisfy the increasingly varied needs of the consumer. Consequently, imports rose, and the trading deficit increased fast, which is not a healthy situation, (unless you are the United States, which run a massive deficit). Besides, the £ was pegged at a fairly high level, and British exporters were faced with increasingly stiff competition on foreign markets. Britain could not devalue, since this would have affected the reputation of the City , London’s financial heart, and have had a negative impact on the “invisibles”, i.e. the income of the banks, insurance companies and other financial services. The interests of British industry were, clearly, at variance with those of British banking. This was neither the first time, nor the last one in history. This represents of the greatest paradoxes of British economic history. Britain invented industry, since the Industrial Revolution started there. However, whenever a contradiction appeared between the needs of industry and those of finance, British governments, left or right, chose finance and sacrificed industry. There are several reasons for this.
1. Naturally, the weight of financial investors in industry is paramount: the only function of a firm is to deliver profits and an enhanced market value for its shareholders.
2. Then, industry developed in the North of the country and the Midlands, areas which were far from London, at the time, and inhabited NOT by supporters of the Monarchy and the Established Church ( the Church of England), but by” non-conformist protestants” who were distrusted, and even excluded from public office in the 18th century.
3. Besides, when the aristocracy realized, from the early 19th century onwards, that it should diversify its fortune, and not be content with land ownership, it invested in financial companies, and banks, NOT in industry. The banking sector was therefore staffed by people who were much closer to power, more prestigious and influential than the rather down to earth industrialists in the North of the country (who had a funny accent and no manners). This has survived to this day. The children of rich families are rarely encouraged to go into industry.
4. For conservative governments, the fact that industry had given rise to the working class, and was the power base of trade unions did not improve its image. (This became a particularly powerful argument in the 1980’s, under Margaret Thatcher)
5. Britain’s balance of trade had depended on the “invisibles” since the early XXth century. Without the income derived from the financial investments of rich foreigners, Britain would have a permanent deficit, since it imports many more industrial goods or much more agricultural produce than it exports. This explains why even Labour governments could not afford to jeopardize the standing of the £, and the reputation of the City, a notion which is based on confidence, and psychological factors.
For all those reasons, there was no way the government could devalue the £, in order to improve its industrial exports, and make imports less attractive. Besides, the long term problem could have been solved, or reduced , by a measure of “economic planning”. In many countries, the government deliberately encouraged industry to develop a particular sector, so as to meet local demand. This was unthinkable in Britain, which remained faithful to its liberal principles.
As a result, the only option left to governments seemed to be the manipulating of demand, so as to reduce it, and, consequently, reduce imports when the deficit seemed to get out of control. The reduction of demand was called “stop”. This could be engineered easily … by reversing Keynes’s recipes. The government could increase interest rates at will, since the Bank of England was under its control (contrary to the Bundesbank in Germany). As a result, consumers reduced their shopping and postponed their large purchases, such as houses or cars. Governments could also increase taxation, and stop spending money themselves by refraining from embarking on public works. Such policies were very effective, and did reduce demand, and the deficit, but also had negative consequences. They were first of all unpopular, since the general mood was one of growth, confidence and expenditure. Besides, they implied a fall in living standards, a rise of unemployment, and also affected British industry, which had less customers in Britain. They affected industrial production, and profits. Therefore, “stop” policies” were only maintained as long as the trade deficit was really worrying. As soon as it improved, they were abandoned, and governments resorted to the much more palatable keynesian ministrations, encouraging demand by reducing interest rates and taxes, and starting public works. Logically enough, this was called a “go” type of policy. “STOP GO” is not a policy, but two completely contradictory policies. It also became known as the British disease.
The first “stop” took place in 1952, the next one in 1956. Before the 1959 elections, the government adopted a popular “go” type of policy, followed by a rather hard landing, and a stop … after the elections. IN the early 1960’s, the cycle became shorter and shorter, which proved the government was in fact losing its grip over the economy. The trade gap was yawning, and, by 1962, unemployment rose to 800 000, which, at the time, was considered as very high.
The economic difficulties experienced by Britain in the late 50’s and the early 60’s played an important part in the government’s conversion to the idea of a European Common Market in 1960.
2. Industrial relations and class.
Throughout the 1950’s, Trade Unions were able to obtain very satisfactory terms of employment for their members: employers were in some cases competing to attract qualified workers, and were prepared to pay good wages, which could be compensated by productivity gains and matched by high profits. The Trade Union membership rose, and reached 45% . Trade Unions did not need the State to intervene for them and impose good wages, since they were strong enough to do this by themselves. Besides, they were wary of State intervention, which they saw as being most of the time on the employers’ side. They did not demand a minimum wage in the I950s. The demand only appeared in some badly paid sectors in the 1970’s, and was satisfied in 1999. This suspiciousness towards the State explains why disputes remained in the industrial sphere, and did not overlap with politics or lead to major crises as they often do in France. Although Britain traditionally had a lot of strikes, no-one would describe the Trade Unions as “radical”.
Employers did their utmost to avoid having to negotiate at the national level with Trade Unions, which were staffed by competent people who were also very tough bargainers. Employers believed that negotiating with local trade unionists would be easier. Besides, a lot of the bargaining concerned productivity, the introduction of new machinery, and this could only be discussed in a pragmatic way, bearing in mind local conditions. Therefore, more and more strategic negotiations took place at factory level. This reinforced considerably the power of the local trade unionists, although they had absolutely no legal recognition or status. The local officers of the Trade Unions were called the “shop stewards”. They proved just as tough as the national leaders, and much more uncontrollable. Whereas a national leadership could take into account a variety of arguments and parameters, and integrate a lot of elements in the negotiation process, local shop stewards were much less easily convinced, and insisted on wage increases, whatever the circumstances. Industrial relations became more and more difficult, and, in the 1960’s, largely unmanageable. At some point, there were 150 000 shops stewards, which implied the same number of negotiations …
After the 1959 elections, the government tried to impose a pay squeeze, in order to curb what was labelled as the “wage drift””, i.e. excessive wage increases. It was unable to deal with industry, and concentrated on the public sector, whose pay was traditionally rather low. Teachers, nurses, hospital workers resented this , and the early 1960’s were therefore plagued by recurrent strikes.
In spite of the relatively favourable economic conditions, industrial relations were therefore difficult, and increasingly out of control.
Towards a classless society ?
The whole country became rather unsure of itself, as far as class is concerned. On the one hand, a significant c<urrent of public opinion considered that the working class was disappearing, and class barriers were a thing of the past. This was very much encouraged by American thinkers, who wanted to encourage Europeans to construe their political lives on lines similar to the “American model”, and forget about class politics. In the context of the Cold War, it was thought that “working class parties” were a liability, since a section of them might fall under the influence of communism. The new affluence seemed to have brought into being a new society, where everyone would consume the same types of products, including cultural artefacts. Social mobility seemed to open opportunities for the gifted children of the working class. The Welfare State had removed the stigma of poverty, and a n umber of optimists imagined that this trend could not possibly be reversed, and would even continue in the future. This was the case of a famous Labour politician, Anthony Crosland, the author of The Future of Socialism (1956), who considered that Britain was no longer a really capitalist society, and the issue of ownership of industry was irrelevant. His followers were called the “revisionists” because they wanted to revised the Labour Party’s constitution (this bears no relation whatsoever with the French “révisionnistes”, an extreme-right wing group who deny the extermination of Jews during the Second World War). Crosland and his friends tried to convince the Labour Party to abandon “clause 4” of its constitution, which advocated nationalization of industry. They failed to obtain a majority in the party in 1960, and the party retained clause 4, which was only abandoned under Tony Blair in 1999.
Not everybody agreed that “class” had disappeared from the scene. In spite of the relative material comfort, differences remained huge, especially in the cultural field. Richard Hoggart published The Uses of Literacy in 1957, proving that the working class was still very different culturally from the rest of the country, spoke a different language, behaved differently, and that the media were doing their best to eradicate discontent. A television soap opera (Coronation Street) was based on this, and run for over 30 years. A novelist, Alan Sillitoe, published very popular novels on working class life, such as Saturday Night and Sunday Morning, highlighting the distinctiveness of its culture. Since those days, a section of British opinion has held the view that social differences were an artificial construct, and aggravated by culture.
3. Years of consensus ?
According to a commonly held view, The Right and the Left, in the 1950’s, shared a number of fundamental principles, and the differences between them were gradually eroded. This was said at the time. Jounralists coined the word “butskellism” to describe this, using the first part of the name of the conservative leader (RA Butler) and the second part of the name of the labour leader (Gaitskell).The thatcherites, in the I980’s, and indeed Margaret Thatcher herself were very critical of the conservative leadership on the 1950’s, and took them to task for accepting to run the country according to the principles adopted after the war, i.e. during a labour government. The mere notion of “consensus” was anathema to Mrs Thatcher. There is some evidence that Labour and Conservatives shared a number of ideas: their common hostility to the Communist world, their support for the USA during the Cold War, the acceptance of the Welfare State, the domination of a rather mild Labour leader, Hugh Gaitskell, all seemed to prove that the differences had become very minor. In the Conservative party, the new generation of leaders had become prominent during the war: they accepted the new role of the State, public responsibility for social policy, and a measure of redistribution. Their club, the Tory Reform Group, belonged to the tradition started in the 19th century by Benjamin Disraeli, a Conservative Prime Minister. In his novel “Sybil”, he explained that Britain was divided into “two nations”, the rich and the poor, that this was not right, and should be changed. This form of conservatism with a social conscience was (and is still) referred to as “one nation conservatism”. Naturally, Margaret Thatcher belonged to a different brand of conservatism.
All this has led us to overestimate the extent to which the Conservatives of the 1950’s had accepted and absorbed the principles of the “People’s Peace”, as the post war settlement was sometimes called, by reference to the Second World War, dubbed “The People’s War”. In fact, the opposition between Right and Left was a very real one. Conservative politicians visited regularly the United States, in search of inspiration, and came back with very detailed plans, for example in the field of television. The Conservative governments allowed the creation of a private television company, which would compete with the BBC, although private radio stations were still illegal. American series and programmes started flooding British screens, and the commercial logic started making an impact on the British media, which had so far been run according to the logic of “public services” and had been to expected to improve the public’s culture and understanding.
IN the field of welfare, universal benefits were not increased. They could not meet all of people’s needs, and were supplemented … according to the traditional principle of means testing, which amounted to a negation of beveridgianism. New benefits were increased or invented to pay for old people’s fuel, special needs etc. Universalism was dead, and the “trap of poverty” was slowly being opened: as people’s earned income increased, their benefits decreased, and their taxation increased; leaving them no better off. There was no point in finding work.
The 1957 Rent Act abolished rent controls, and was called “The Landlords’ Charter”. Rented accommodation is much less common in the UK than in continental Europe, and this clearly worsened the trend. This was seen as a very harsh measure, designed to benefit owners.
Enoch Powell, the a respectable and rather gifted conservative junior minister even resigned from the government in protest against what he considred to be excessively Keynesian, unorthodox principles (i.e. deficit budgeting, reflation, and concern for unemployment).
The consensus, if it ever existed, did not apply to the whole of public policy.
4. From cultural Conservatism to dissent.
The 1950’s are usually associated with glossy American magazines, and the cultural conservatism that went with them, in terms of family life, deference to the upper classes and the Establishment. This is only part of the picture. The capital penalty was retained, but was challenged in the House of Commons, for the first time, in 1956. Britain, contrary to many other countries, such as France, had extremely repressive laws against homosexuality, which became a source of embarrassment. Since homosexual relations were against the law, plainclothes policemen were sometimes asked to loiter in the areas where homosexuals were to be found, incite them to commit unlawful deeds, and charge them. Their testimonies in court were ridiculed, and repression was considered as both a waste of time for the police and an infringement against individual freedom. In spite of debates in the House of Commons, repression was maintained until 1960.
In the late 1950’s, ideological fault lines appeared in society. Playwrights, novelists, intellectuals, historians, started questioning the status quo. John Osborne, a playwright, (the author of Look Back in Anger), and the group of novelists called the “angry young men” (John Wain, John Brain and others) expressed their contempt for a materialistic society which retained class differences but kept everyone happy by giving them washing machines. Competition for well paid jobs or positions, and the purchase of domestic appliances, did not seem a valid goal for existence.
This ethical stance, highlighting the emptiness of life, was reinforced by the questioning of the nuclear option.
In search of a scapegoat: immigration.
Immigration had been encouraged throughout the 1950’s, and even organized deliberately, so as to meet the labour shortage and ease the pressure on wages. One of the first boats to bring West Indian immigrants to Britain, the Empire Windrush, has remained to this day a symbol in the culture of Jamaicans. Although they worked hard, the living conditions of immigrants were acceptable, with the exception of housing, since many owners refused to rent flats to Blacks. They were, on the whole, ignored more than victimized. Affluence, American restrictions of immigration, and historical connections made Britain a natural goal for potential immigrants.
Distrubances broke out in 1958, when the flames or ethnic enmity were fanned by an extreme right wing group. There were riots in Notting Hill (the area in London were many West Indians lived, and the Carnival now takes place) and in Nottingham. A number of politicians and journalists started recommending restriction of entry, at a time when the numbers were increasing fast: from 20 000 in 1959, they reached 58 000 in 1960, and 115 000 in 1961. In 1962, the government imposed the first restrictions. The Commonwealth Immigration Act stipulated that potential immigrants could no longer freely enter the country. They needed a job contract (prior to entry), or the type of professional qualifications that were in short supply (engineering, nurses …) - or enough money to sustain themselves without working, i.e. a lot. In addition, quotas were also created for each nationality. In practice, this affected Blacks only, since it did not apply to Irish immigrants, even though they were almost all non qualified.
This Act was extremely controversial. It was criticized by the Left, but seemed to be supported by a significant section of public opinion. For the first time in the XXth century, immigration had become a political issue.
6. Foreign Policy: the growing irrelevance of the three circles.
Winston Churchill used an image to describe what he felt should be the role of Britain in the world. It should be, he said, at the intersection of three circles. The first one symbolized the supposedly “special” relationships with the USA. The second one, relationships with the Commonwealth. The third one, relationships with Europe. Britain should never give precedence to one of the three, and forget about any of the three. This completely dominated the strategic thinking of the Foreign Office until 1960. In one of the three circles was less important than the others, it was certainly Europe.
This became irrelevant because the reality of the special relationship was brought home to Britain , when it appeared the USA considered Britain as a junior partner among others. The Commonwealth also lost a lot of its symbolic and economic aura in 1960. The only alternative left was the European connection, chosen by default.
The strategic partnership with the US seemed increasingly problematic. The US proved, in 1956, that it would not hesitate to exert unfriendly pressure on the UK if need be. The cause of this crisis lied in Egypt. The new Egyptian nationalist leader, Colonel Nasser, a leader of the “non aligned world”, had applied for a loan , in British banks, in order to build a large dam on the Nile. Although the banks agreed, the deal was stopped by the British government: Egypt had been within its traditional sphere of influence since the deal with France, at the time of the Entente Cordiale, and Britain resented Nasser’s independent policy. In retaliation, Nasser nationalized the Suez Canal, built by a French company, under Ferdinand de Lesseps, and operated and owned by an Anglo French consortium. This was an illegal move, which Britain and France tried to prevent. Secret agreements were struck between Britain, under PM Anthony Eden, France, under the socialist Guy Mollet (an English teacher by trade !), and Israel. France was particularly incensed by the military support Nasser provided Algerian nationalists. The Algerian war of independence had just started in November 1954. Britain and France sent paratroopers to Egypt, and seized Port Saïd without much fighting. This was considered as unacceptable by the US. It seemed to them that Britain and France had not fully understood that no move could be made without the agreement of the US. The attack seemed to be a classical case of colonialism: in the world of the mid 50’s, domination should take more sophisticated forms, and influence should use other channels than the rather primitive one of direct intervention. Besides, the whole of the Arab world was insulted. The rash Anglo French move run the risk of pushing oil producing Arab countries into the arms of the Soviet Union.
The US expressed their discontent, and hit Britain economically, by starting selling assets in British Pounds. Faced with the prospect of a run on the Pound, Britain, and France withdrew their troops from Egypt.
This damaged British influence in the Middle East, but also demonstrated how tenuous the link with the US really was. As far as home affairs are concerned, Suez had an interesting consequence. Eden resigned, but no elections were called. The Conservative Party, therefore, had to chose a new leader, who would automatically become the Prime Minister. Two leaders were contending for the job, Butler and Macmillan. For the last time in the XXth century, and so far in history, the Queen of England exerted her influence, and supported Macmillan.
The special relationship with the US was increasingly unequal, and largely based on dependence. The most obvious reason for this was the growing gap between the nuclear capability of the US and the USSR on the one hand, and that of Britain. The speed of the arms race was such, that the discrepancy between the megatons of the superpowers’ bombs and those of Britain’s became considerable. Britain was left with a modest nuclear weapon, which it could only modernize at considerable cost , and with difficulty. The first atom bombs were delivered by airplanes. The new generations were fitted on missiles, i.e. rockets. Britain failed to produce its own rocket, the “Blue Streak”. For years, it hesitated, and finally had to buy a rocket … from the Americans. Its nuclear bomb was therefore dependent, for its delivery, on US technology, and, ultimately, political goodwill. Missiles were not just bought “off the shelf”. They required constant maintenance by their manufacturers, and upgrading, so as to match the improvements in the potential enemies’ defence, radars, and rockets. The purchase of the Polaris missile system from the USA, agreed at the Nassau conference in 1963, spelled the end of the independent British nuclear deterrent. In return for missiles, Britain even had to grant the USA a basis for its own submarines, at Holy Loch in Scotland.
The nuclear option, therefore, seemed to reduce Britain’s independence from the US, rather than increase it, as the French believed it did in their case. It also seemed to turn the country into a favourite target for the USSR. This is the reason why a significant section of public opinion rejected the nuclear option, on ethical as well as on political grounds. It was useless, since the threat of “mutual assured destruction” (or MAD), on which nuclear deterrence was based, could not be meant seriously, and dangerous. The movement advocated “unilateral disarmament” ( meaning disarmament by just one side, and in fact by just one country, Britain, since the US could be trusted never to disarm). It hoped that Britain could give a “moral lead” by proving it was serious about disarmament, and that it could restore goodwill in international relations. The Campaign for Nuclear Disarmament (CND) mobilized the majority of intellectuals, working class militants, and the churches, from 1958 to 1963. Marches were organized, and civil disobedience campaigns, - complete with sit ins, Nobel prize winners being arrested and charged – hit the headlines.
The special relationship was therefore increasingly problematic.
The former colonies.
After a rather bloody rebellion in Kenya, Britain increased the pace of decolonisation in Africa and elsewhere: Kenya in 1954, Ghana, Nigeria, Sierra Leone in 1956-57, Cyprus in 1957, then Jamaica, Trinidad, Uganda, Zambia, Malawi, Malta were rapidly granted independence on the basis of a realistic assessment of the relative political and economic costs of British administration, and of independence. The relative importance of economic exchanges with former colonies and with Europe changed fast. Trade with the Commonwealth declined rapidly.
The Commonwealth, however, was and is still supposed to be a channel through which countries which share to some extent a British heritage uphold this identity, summed up in a number of policies and values: the rule of law, the use of English, political democracy, free trade, educational standards etc. Naturally, this includes a measure of solidarity with Britain, as appeared clearly in war time (e.g. the Falklands War in 1982).
In 1960, a crisis took place within the Commonwealth, concerning one of its members, South Africa. South Africa was an independent country, in which the white minority dominated a black majority, deprived of constitutional rights. The official policy of apartheid , i.e. segregation, between Blacks and Whites was found unacceptable by the majority of members of the Commonwealth, many of which were Black states. Even though Britain itself was critical of South Africa, it wanted to refrain from attacking it openly, since important financial interests were at stake. The Commonwealth went ahead regardless, South Africa left the organization and links with the UK were weakened. Britain had proved unable to have its way. The Commonwealth could no longer be trusted as a vehicle for British interests.
Europe remained the only solution. Yet, this was not the case until the end of the decade. Before then, the attempts at furthering European unity were ignored or scuppered by the UK. The first attempt took place in the early 50’s, and concerned defence.
Faced with the Korean war, the United States encouraged the idea of a European army, which could shoulder partly the burden of European defence, and include a German contingent. The agreements following the Second World War prevented Germany from having an army, and the creation of a “European” army would be a way of by passing this. Detailed plans for a “European Defence Community” were drawn, including the number of troops to be provided by each country: France, Italy, Germany, the UK. Britain withdrew from the plan at an early stage, and the whole idea collapsed as a result. This failure convinced the father of European integration, Jean Monnet, that a different method should be used. Instead of concentrating on ambitious political plans, which required a pooling of sovereignty, such as defence, Europe should act pragmatically, and concentrate on economics. Once economic unity had been achieved, in a few decades, political unity would follow. This is known as the “Jean Monnet method”, and is illustrated by the Common market.
At the time, Britain was interested in neither political nor economic unity. When, in 1956, discussions started in Messina between the Benelux, France, Italy and Germany in view of creating a European common market, Britain, who was invited from the start, declined to even join the negotiations. The other countries went on regardless, and signed the Rome Treaty in 1957. This proved immensely successful economically, even if the political elements featuring in the Rome Treaty were not really implemented until the late 1980’s and the signing of the Maastricht Treaty. In practice, economic growth increased fast, exchanges between the member countries grew apace, and a complex machinery for solving problems and pooling decision making was set up, leaving Britain aside. In order to exert some pressure on the Common Market, Britain played a leading role in the creation of the European Free Trade Association ( AELE in French), together with a number of countries such as Portugal, Sweden and Switzerland . The member countries shared the ideal of free trade, and were prepared to abolish trade barriers between them, but, contrary to the Common Market, they did not want an external tariff, which would penalize their trade with the rest of the world ( i.e., mostly, the USA) and increase the cost of their imports. The volume of exchanges between the member countries of EFTA, however, was small, compared to their trade with Germany and France, and they never exerted much influence.
By 1960, the British government realized it had made a serious mistake, and decided to apply for membership of the Common Market. It first had to convince the House of Commons, and, to some extent, British opinion. This was achieved. Negotiations then started with the member countries, in order to solve the really complex technical problems British membership would raise. This had also practically been completed in 1963 when the French President, De Gaulle, announced that he would veto British application, on the grounds that Britain, from a strategic point of view, was dependent on the United States. 1963 was also the year Britain signed the Nassau agreement with the US. This was a terrible blow to the British government.. British membership was vetoed a second time by De Gaulle in 1967, and Britain was only allowed to join on Jan 1st 1973. Britain’s early refusal to join the Common market isolated it from Europe for 16 years.
The last years of the Conservative governments were plagued by a number of disasters. The European fiasco was probably the most serious one. Stop-go , the rise in the unemployment figures and a scandal involving a Minister for Defence, a call girl and a Soviet military attaché ensured the victory of the opposition in 1964. Britain, by 1964, was a very different country from that of 1952. Living standards were high, but levels of consumption were at the same time the cause of Britain’s economic troubles, and the country’s greatest achievement.