The United Kingdom of Great

Britain and Northern Ireland

Political and Economic Change

Presentation Outline

IV. Political and Economic Changea) Collectivist Consensusb) Britain ‘s accession to the European Union

(EU)c) Thatcher’s economic reformsd) Blair’s Third Waye) Northern Ireland and the Good Friday

Agreement

IV. a) Collectivist Consensus

• Though the major political parties (Labour & Conservative) differed over how much the government should spend or how much taxes should be cut, they both accepted the post-war welfare state from 1945-1979

Features of the Consensus

• The establishment of the National Health Service (NHS) in 1948 gave universal access to health care

• The government nationalized the railways, telecommunications, coal industry, and transportation networks creating millions of stable, government jobs

• Unemployment insurance and old age pensions were introduced in 1948 as well

The welfare state and John Maynard Keynes

• The collectivist consensus was based on the theory of British economist John Maynard Keynes

• Keynes argued that governments should spend money to keep employment high

Keynesian ideas in effect

UNCHECKED ECONOMY

KEYNESIAN THEORY IN EFFECT

Government saves money

Government spends money

HIGH ACTIVITY

LOW ACTIVITY

IV. b) Britain’s accession to the European Union (E.U.)

• Prime Minister Heath signs the European Economic Community (EEC)Agreement adding the U.K. to what would later become the EU in 1973

•The UK gave up sovereignty over its trading practices, but refused to join the E.U. banking system and continues to use its own currency, the Pound, to this day

•The UK has an uneasy relationship with the EU and is not as committed as other states such as Germany, France, or The Netherlands

Thatcher’s finds a new economist theorist

• Thatcher based her policies on the ideas of Austrian economist Friedrich Hayek

• Hayek argued that high unemployment was sometimes necessary to keep inflation down

• He strongly supported privatization of national industries

• Thatcher privatized the railways, the telecommunication, coal companies, and electricity

• She reduced funding to the NHS• She cut social services and welfare• She privatized pensions• As a consequence, unemployment

remained high, but GDP grew• Many Conservative Party MPs grew

dissatisfied with Thatcher’s right –wing policies and replaced her with a new leader John Major in 1990

Since Thatcher private companies compete to deliver electricity- this has kept electricity prices low for consumers

IV. c) Thatcher’s economic reforms

• Thatcher rejected the collectivist consensus

• She did NOT believe in Keynes’ economic theories

• She believed that neoliberal reforms such as privatization were the best way to keep the U.K. competitive

P.M. from 1979-1990

Increasing GDP but a relatively high unemployment rate

IV. d) Tony Blair’s Third Way

• Blair was elected with a huge Labour majority in 1997 and remained Prime Minister until 2007

• He did NOT reverse the privatization that Thatcher had introduced and tried to balance welfare spending with tax cuts and privatization

•The “Third Way” was an attempt to provide an alternative to the Left/Right divide under Thatcher

•Blair rejected traditional Labour Party platforms such as nationalization and favored a balance between the interests of workers and industry

•Blair also continued to support interest group pluralism

Blair’s democratic reforms

• Reduced the number of hereditary peers in the House of Lords

Championed devolution:1. Called referenda which established the

Scottish and Welsh Parliaments2. Established an elected mayor of London and

the London Assembly3. Played a key role in bringing devolution to

N.Ireland (Good Friday Agreement)

IV. e) The 1998 Good Friday Agreement

• Peace Settlement in Northern Ireland signed by the Republican Catholics and the Protestant Unionists

• Approved by a referendum in Ireland and Northern Ireland

• Led to the establishment of the Northern Ireland Assembly

Terms of the Good Friday Agreement

• Power sharing executive between Protestants and Catholics

• All Protestant and Catholic paramilitary organizations are to be decommissioned (This includes the IRA)

• Possibility of reunification between Northern Ireland and the Republic of Ireland remains an option in the future