The rationing and other restrictions held over from the war held personal consumption at bay until 1954. Wages rose, but these were offset by a sharp increase in prices, which by 1952 were about 50 per cent above those of 1945. After that year, however, earnings rose more rapidly than prices. With the end of wartime controls after 1952 the standard of living, especially that of the industrial working class, rose perhaps more rapidly than it had ever done before.
The increase in production, the end of rationing, the rises in wages and prices, and the boost in internal consumption all took place against a background of full employment. In the United Kingdom unemployment averaged less than 2 per cent of the working population in 1946-54.
This, then, is the short story of British recovery since the war. By the summer of 1956 the Central Statistical Office could announce that from the beginning of 1946 through the end of 1955 the national output of goods and services had increased in volume by one third. Reckoned in monetary value, the increase was even greater: the figure for 1946 was £8,843,000,000 ($24,480,400,000), while for 1956 it was £16,639,000,000 ($46,589,200,000). The difference between the increase in value and the increase in production is due to the continuous rise in prices since 1946.
These are impressive figures. But no one in authority in Britain believes that the nation can rest on them. The double problem of maintaining exports abroad and defeating inflation at home remains.
The two are closely related. In 1950 Britain had grabbed 26 per cent of the world market for manufactured goods. German, Japanese, and other competition has now reduced the British share to about 20 per cent, the pre-war figure. To maintain it, Britain must continue the export drive, and this, in turn, involves the attack on inflation.
Inflation began at the time when the British people were emerging from years of war and post-war austerity. There was more money, and suddenly there was plenty to buy as one by one the controls on raw materials, building licenses, food, and clothing disappeared. By 1955 cars and other products that should have gone for export were being sold in bulk in Britain, and gasoline was being imported for them. Industries that should have been almost totally devoted to export trades were producing for a lucrative home market.
The "squeeze" applied by the Conservative government early in 1956 to halt the buying boom is not, as so many Britons hope, a temporary affair. Until British industry can increase its production and adjust itself to the demands of world-wide competition, the country will have to restrain its home purchases in the interests of overseas sales. The preservation of the present standard of living depends directly on exports. If this hard fact is rejected by the British people, then the economy will deteriorate rapidly.
Those interested in the future of Britain, both Americans and British, have been looking at the nation's industry for a decade and sadly shaking their heads. It is too traditional, it is unenterprising, its workers don't work as hard as the Germans or the Japanese, it is restricted by the trade unions or the employers, monopolies and trade rings stifle it. There is a little truth in each of these accusations. But if all were true or even one completely true, how is the sharp increase in volume of production and the general economic recovery to be explained?
Early in 1956, about eleven years after the last Allied bomber flew over the Ruhr, German steel production outstripped British steel production. This caused a good deal of "viewing with alarm" in Britain, much of it by people who failed to realize that before the war Germany yearly produced about five million more tons of steel than Britain. The health of the British economy today does not rely primarily on its output of basic products such as steel or coal but on the nation's ability to sell its manufactured products.
If the number of employees is taken as a criterion, the most important of these manufacturing industries are: (1) engineering, shipbuilding, and electrical goods, with 1,695,000 employees; (2) motor and other vehicles, 934,000; (3) textiles, 898,000; (4) food, drink, and tobacco, 654,000; (5) precision instruments and other metal goods, 531,000; (6) clothing, 524,000; (7) metal manufactures, 519,000; (8) manufacture of wood and cork and miscellaneous manufacturing industries, 472,000; (9) paper and printing, 445,000; (10) chemicals and allied industries, 402,000.