When Queen Elizabeth II came to the throne, Britain was financially exhausted, rationing still in place and inflation high after the second world war. Then – as is now, after her death on Thursday – concerns over living costs were at the forefront.
Over the course of the second Elizabethan age, the country has grown more prosperous, healthier and socially liberal. Real gross domestic product per person is almost four times larger than at her accession in February 1952, having been kickstarted in the first two decades of her reign by a golden age of economic growth.
This unprecedented period of rising living standards, however, has not always been smooth and wasn’t always equal. For billions around the world there were costs from the way Britain withdrew from empire, alongside profound changes at home, in 70 years of change up to our current economic rough patch.
In her seven decades on the throne the Queen saw five recessions and 15 prime ministers, with the toughest spell for the economy coming in her final years with the 2008 financial crisis, the Covid-19 pandemic and the energy shock amid Russia’s war in Ukraine.
After the white heat of technological revolution heralded by Harold Wilson in the 1960s, growth fizzled out with the oil price shock, strikes and inflation of the 1970s. Inequality soared in the 1980s as central banks stamped out inflation with sky-high interest rates, while whole communities were hollowed out by the dismantling of industry.
Early in the Queen’s reign the economy was geared far more to heavy industry, with national champions, publicly owned industries, and a welfare state in its nascent years. It was a coal-based economy still, reflected in the Great Smog of London in December 1952 only months into her reign.
Industrial employment – including construction, manufacturing and utilities – was above 40% when her father, George VI, died, yet fell to as little as 15% by the time of her sapphire jubilee in 2017. Britain shipped in more goods from overseas and made less at home as globalisation advanced, and as the service sector grew thanks to a boom in consumer credit and the big bang reforms for the City of London.
In the early 1950s, poverty levels were low, however – at least in relative terms, in a time before most households had cars or colour televisions. As few as 13% of households were in relative poverty in 1953, the year of her coronation – defined as having income 60% below the national median, before housing costs – and remained at that level for decades despite the stellar economic growth of the 1960s. With the boom in higher-paying service sector jobs and cuts to welfare in the 1980s, relative poverty rose sharply to hit 22% by 1990. It has fallen since but remains high.
While growing significantly healthier and wealthier, Britain has, however, lagged behind several of its economic rivals, says Jagjit Chadha, the director of the National Institute of Economic and Social Research. “No new IMF nor World Bank would, for example, offer the UK a seat at the top table, which was certainly the natural order in the first half of the 20th century.
“That the Queen was nevertheless able to retain the international popularity of our monarchy at a time of imperial retreat and even bolster the UK’s soft power is an enduring economic feat.”
Throughout history our politicians have looked back for lessons about how to plot a successful course for the economic future. It has, though, not always been helpful, and might throw up a few unwanted answers for the politicians of the day.
When Margaret Thatcher came to power, the leading economic historian Nick Crafts says she asked her advisers to appraise the employment policies of her political hero, Winston Churchill. However, the results were far from helpful for the Iron Lady, who found Britain’s wartime leader ran a policy of appeasement when it came to the trade unions during the 1950s.
Unemployment during his second term in office, as the Queen came to the throne, was low at just under 2% of the working-age population; a figure unthinkable today, when a jobless rate of just under 4% is considered a sizeable victory in an otherwise challenging world.
Fearful of electoral disaster if unemployment rose, Churchill prioritised cordial labour relations to help keep it low. Thatcher was unimpressed, Crafts says: “When they handed her the report, she apparently read it and declared: wet, wet, wet!’”
Today the new prime minister, Liz Truss, appears on a similar mission to take the greatest hits of Thatcherism and repurpose them for the modern day. Yet there is only so far these lessons apply; coming as they do as the changes of decades past have reshaped the conditions for the road ahead.
Sweeping tax cuts, deregulation and fighting trade unions is hardly a successful recipe today, at a time of broad public support for more state spending for austerity-battered public services. In an age of zero-hours contracts and pay failing to keep pace with the soaring cost of living, few would wish to see their rights at work torn up, or have the regulations ensuring food and product safety watered down.
If there are learnings from postwar history to take, Truss could instead heed the leading voice of British industry, the CBI lobby group, which has called for a policy response closer to that used by the 1945 Labour government, and of partnership between government and business.
Truss has promised to “deliver, deliver, deliver” on rebooting the British economy. Dropping the failed lessons of the past would be a good way to start, and looking to different points of progress from the second Elizabethan age would help.
“We are not faced with postwar reconstruction, industrial decline, the need to deregulate nor the need to hitch our colours to the rise of the City,” Chadha says, underscoring this point. “It is more a problem of how to bring the country and devolved nations together and aim for economic and social progress for all.”
