The Unemployment Policy Discussion in the U.K. in the 1970s

Abstract

The full employment era in the UK lasted from the Second World War until 1966. In searching for other explanations of the rise in unemployment, one naturally turns to see what has happened to employment. The Cambridge Economic Policy Group have for some years put forward the view that it is the UK’s balance of payments which prevents successive Governments from pursuing more expansionary policies which would have led to faster growth in output and employment, to lower unemployment, and even to lower inflation as well. In October 1964, the incoming Labour Government confronted a severe balance of payments crisis, resulting in part from the expansionary policies of its predecessor. The Government had intended to abolish ‘stop-go’ and accelerate the rate of growth of the economy, and a National Plan setting out its objectives was published about a year after taking office.