United Kingdom

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Full Report: United Kingdom


1910-1913: A long-standing parliamentary democracy with a constitutional monarchy, the United Kingdom is held up as a classic laissez-faire system based on rule of law. Its dominance as an economic and political power is backed by its naval supremacy. The British Empire is the world's biggest: It covers a quarter of the earth's land surface with a population of 425 million, 366 million of whom live in India.

1914-1917: The empire goes to war against the central powers following the murder of Archduke Ferdinand. Millions of men are recruited into the military, which plays a pivotal role in campaigns on the continent, in the Mediterranean, and the Middle East. The economy is taken over and planned by the government, its resources pumped into a total war effort.

1918: Following the Allied victory and the dismemberment of the Ottoman Empire, the British Empire expands to its greatest reach with the trusteeships of Palestine, Iraq, and Transjordan. But Britain is saddled with massive debt and no longer the strong power or hegemonic guarantor of the world economy. Domestically, the war causes profound social change, such as granting women the right to vote.

1919-1928: To troops returning home, the promise of a land fit for heroes turns out to be a false hope. Following a short-lived boom, Britain experiences unemployment, strikes, rising prices, and a slump in wages. The decline in traditional industries leads to a growing division between the affluent South based on a flourishing London and the decaying North, a dividing line that remains to this day.

1929-1938: Like the rest of the world, Britain struggles to cope with the repercussions of the Great Depression. But its political culture and social solidarity help maintain order. The rapid development of new industries to replace the declining staples, along with a housing boom, the start of rearmament, and growing demand for consumer goods, result in a marked improvement in the standard of living.

1939-1944: Britain ends a policy of appeasement by declaring war on Germany in 1939. As in World War I, the government takes control of the economy, planning every aspect of its production. After France's surrender, Britain fights on alone against the Axis powers, for a year and a half, enduring terrible bombardment, casualties, and economic pain. Some 54 percent of its GNP is devoted to the war.

1945-1950: A Labor government turns Britain into a socialist democracy. It nationalizes industries, builds the welfare state, and establishes a mixed economy, which has wide appeal around the world. After decades of demands for self-government, India is declared independent in 1947, setting in motion a rapid unraveling of the British Empire. Almost all the colonies will be independent by the late 1960s.

1951-1963: On the surface, the 1950s are a time of expansion and prosperity. The economic well-being of the average Briton rises dramatically and visibly. But rising interest rates and inflation combine with outbreaks of industrial unrest and a series of "stop-go" three-year cycles to significantly damage the economy. As the empire dissolves, Britain searches for a new role and identity in the world.

1964-1969: The economic concern of successive governments is to increase productivity and ensure peace with the labor unions so that public expenditure can be met. The reality is poor labor productivity, sterling crises, and trade union unrest. Britain resorts to a planned economy, while benefiting from an unprecedented rise in tourism attracted to the culturally "swinging London."

1970-1974: Prime Minister Edward Heath aims to take Britain into the European Economic Community (EEC), break the unions' power, and restore economic growth. After Britain's successful entry into the EEC in 1973, the oil shock hits. The energy crisis results in British industry operating only three days a week. Heath is defeated by the unions, and the economy falls into stagflation.

1975-1979: Prices continue to rise rapidly, and labor union unrest escalates into a series of nationwide strikes that bring the whole country to a virtual standstill, the "Winter of Discontent." The Labor prime minister, James Callaghan, is defeated by a vote of no confidence, the first since 1924. Conservative Margaret Thatcher becomes the first woman prime minister in British history.

1980-1989: Thatcher ends the postwar Keynesian consensus and sets Britain on a new course. She aims to halt the period of decline and instill a spirit of enterprise. Victory in the Falklands War over Argentina lifts her popularity and Britain's international standing. The defeat of the 1984 miners' strike breaks the power of the unions, and a policy of privatization sells off most state-owned industries.

1990-1996: Britain signs the Maastricht Treaty on closer integration among members of the European Union, but Britain's traditional European skepticism leads to significant opt-out clauses, particularly on currency and social issues. Britain's withdrawal from the Exchange Rate Mechanism (ERM) has a damaging political impact, but effectively ends the country's longest recession since the 1930s.

1997-2000: Prime Minister Tony Blair's theme is New Labor, a different Labor Party eager for modernization. Under his leadership the party continues Thatcher's monetarist-style policies and agrees on harnessing the power of markets, but he restores full employment as a goal and aims to rebuild the spirit of community and social welfare damaged under Thatcher.

2001-2002: Tony Blair and Labor win a sweeping reelection in 2001 and continue to dominate the political landscape, promoting incremental reforms but maintaining overall market orientation. The economy still outperforms much of Europe but is affected by the global slowdown. The successful advent of the euro raises fears that the UK has been wrong to opt out.

2003: Blair's close alliance with the U.S. in the three-week military action against Iraq causes a Labor rebellion and the resignation of several ministers of Parliament. But the House of Commons supports the campaign. Antiwar sentiment among the public is strong, as is disappointment over the government's failure to improve public services. Economic growth, albeit slow, remains ahead of most of Europe's.

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1910-1913: A constitutional crisis over the role and power of the unelected House of Lords is the backdrop to two general elections in the same year, 1910. The Liberal Party wins both, and the Lords' power to veto legislation is trimmed. Home rule for Ireland is one of the most fiercely debated political issues. Edward VIII dies, but the constitutional monarchy remains strong, and George V becomes king.

1914-1917: Britain's declaration of war on Germany effectively suspends party politics, and from 1915 Britain has a coalition war government. Laissez-faire Britain experiences a dramatic expansion in the power and authority of government. A 1916 rebellion in Dublin and its suppression by Britain mark the beginning of the Irish war for independence.

1918-1923: A split in the Liberal Party marks its decline as one of the two main parties. The granting of universal male suffrage and limited women's suffrage triples the electorate. It makes Britain's move from aristocracy to democracy largely complete, and provides the base of support for the working-class Labor Party. In 1921 dominion status is conceded to the Irish Free State (Southern Ireland).

1924-1928: In 1924 the Labor Party, under Ramsay MacDonald, forms its first (minority) government. It lasts just one year but marks Labor's replacement of the Liberals as the main alternative party. The 1926 General Strike is a turning point in industrial relations. Trade union power is curbed, and the number of strikes declines. In 1926 Britain formally recognizes its imperial dominions as autonomous.

1929-1934: The year 1931 sees the greatest political upheaval in peacetime Britain. Faced with the fallout of the Great Depression and a sterling crisis, MacDonald's second Labor government falls, replaced by an emergency national coalition government. A general election ends in a Conservative landslide that transforms the make-up of the coalition. A series of national coalitions rules Britain for a decade.

1935-1938: In 1936 newly crowned King Edward VIII causes a political storm when he abdicates to marry an American divorcée. Faced with a fascist uprising in Spain, Germany's military buildup, and Italy's invasion of Ethiopia, Britain follows an overall foreign policy of nonintervention and appeasement. Nevertheless, vast air force and naval programs ready Britain for war.

1939-1944: The Irish Republican Army (IRA) begins a bombing campaign in Britain, demanding that British troops withdraw from Ireland. As World War II begins, a British setback in Norway discredits Prime Minister Neville Chamberlain; Winston Churchill replaces him. The war overrides Britain's tradition of individual liberty: Conscription is mandatory, and jobs are made to serve the war effort.

1945-1950: A Labor landslide ends Churchill's coalition government, and Clement Attlee becomes prime minister. Labor's first parliamentary majority marks a political change of direction for the country towards socialism, with sweeping economic and social reforms. At Yalta, then Potsdam, the victorious Allies -- Britain, the Soviet Union, and the United States -- meet to divide up postwar Europe.

1951-1954: The Conservatives under Churchill are returned to power in 1951, where they remain for the next 13 years. They retain the welfare state and continue most other Labor policies. "Consensus Britain," in which political parties broadly agree on Keynesian economic policy, will last for three decades. Queen Elizabeth II accedes to the throne of an empire in retreat in 1952.

1955-1963: In 1955 Churchill retires, and Anthony Eden becomes prime minister. After Egyptian President Nasser nationalizes the Suez Canal, Britain tries to reoccupy it in a belated attempt to arrest the retreat from empire. But international pressure forces Britain to withdraw and Eden to resign. His replacement, Harold Macmillan, successfully patches up Britain's damaged relationship with the U.S.

1964-1969: The long Conservative tenure comes to an end, and a Labor government comes into power. The economic situation in 1966 forces Harold Wilson's government to resort to crisis management. Unrest in Northern Ireland increases; the British army takes over responsibility for security, and troops will remain for 30 years. In 1969 the legal voting age is lowered to 18.

1970-1974: Edward Heath, the new Conservative prime minister, tries to break the increasing power of the trade unions as strikes and industrial disputes proliferate. He attempts to ban strikes and calls a general election over the question, "Who governs Britain?" But Labor wins the election, and Harold Wilson, prime minister for the second time, complies with the unions' demands.

1975-1978: Labor's government grows fragile when it loses its majority in a series of by-election defeats and defections. Labor-sponsored referendums in Wales and Scotland to create devolved assemblies meet with defeat. Harold Wilson and his successor, James Callaghan, cannot come to terms with the labor unions. The result is crippling all-out strikes, the "Winter of Discontent."

1979-1982: The year 1979 marks a milestone in British history, with the election of the first woman prime minister, Margaret Thatcher, at the head of a rejuvenated Conservative Party. Thatcher renounces the years of political consensus and sets out to end socialism in Britain. In 1982 Britain successfully repels an Argentine force from the contested Falkland Islands, and Thatcher's popularity soars.

1983-1986: Thatcher wins a resounding second victory in the 1983 general election, with a huge majority in Parliament. She begins a gradual limitation of the power of the trade unions that ends with a yearlong strike by the National Union of Mineworkers over the closure of 20 coal mines considered unproductive. The government's victory in the standoff marks a major shift in political power.

1987-1991: Thatcher wins an unprecedented third general election in 1987. But her insistence on replacing local property taxes with a deeply resented poll tax (a fixed per capita levy unrelated to ability to pay) and her unwillingness to fully integrate the pound into a common European currency alienates many in her own party. Faced with internal opposition, she resigns in 1990 and is replaced by John Major.

1992-1996: The Conservatives win their fourth consecutive election in 1992, but as an economic recession lingers, their popularity plummets. The question of Britain's union with Europe splits the party, but in 1993 Major ratifies the Maastricht Treaty with Britain's social chapter and single currency opt-outs. Personal scandals and the "mad cow disease" crisis embarrass the government.

1997-2001: Tony Blair's rejuvenated "New Labor" Party wins the 1997 election in a landslide. Purged of its traditional socialism, Labor now accepts many of Thatcher's reforms. Referendums establish "devolved" regional assemblies in Wales and Scotland. In 1998 the Good Friday accord is signed, and a new elected Northern Ireland assembly established. Labor is triumphantly reelected in 2001.

2002: Tony Blair and the Labor Party maintain dominance; Conservative leader Iain Duncan Smith fails to revive the opposition. But Blair faces opposition within his party and public protest as he pursues a strong alliance with the United States over possible war with Iraq. The Good Friday accord in Northern Ireland falls apart, and the province is again under direct British rule.

2003: Tony Blair wins Commons backing for joining the U.S. in war against Iraq, but divisions over the war and the government's failure to deliver on promises to improve public services lead to a major Labor Party rebellion. Several Labor MPs resign, including Commons leader Robin Cook. Unlike U.S. president Bush, Blair advocates a strong role for the U.N. in post-conflict Iraq.

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1910-1913: Britain is the most industrialized economy in the world, the world's largest trader, Europe's largest manufacturer, and the center of the globe's communications. Britain's laissez-faire empire has led the remarkable boom in world trade that marks the start of the 20th century, exporting the virtues of free enterprise and economic liberalism.

1914-1918: World War I leads to an extension of the regulatory powers of the government in order to mobilize and apply men, munitions, and resources across the empire on a vast scale. The Defense of the Realm Act empowers the government to take over control of the railways, coal mines, and even flour mills. Food rationing is introduced, and new ministries are created for labor, shipping, and food production.

1919-1922: WWI cripples Britain, with 750,000 men lost, spiraling debts, and resources destroyed. Harsh demands on Germany, formerly Britain's largest foreign customer, keep foreign markets depressed. J.M. Keynes predicts Germany's treatment will spawn future conflict. Unemployment soars until a fourth of the workforce is jobless. Widespread strike action in 1921 culminates in full-scale industrial depression.

1923-1928: Return to the gold standard at prewar rates makes industry uncompetitive. Unemployment, foreign debt, and stagnation in the historic economic bases of iron, steel, coal mining, shipbuilding, and textiles keep Britain on a low ebb. Despite a German revival, unemployment stays above 10 percent. A coal-price collapse fuels a miners' walkout and sympathy strikes. The government holds; the General Strike fails.

1929-1932: In 1929 the Great Depression devastates the British economy and that of the rest of the world. A major exporter, Britain is hit hard. By the end of 1930, unemployment doubles, and by 1931 it rises to 25 percent of the workforce. Britain comes off the gold standard and pursues a very strict fiscal policy. Government spending is cut, interest rates are lowered, and import protection begins.

1933-1938: While hardships endure, Britain begins in 1933 to see considerable growth and a rise in prosperity. A modest rise in exports thanks to a cheaper pound, and a major revival in housing construction aided by reduced interest rates, help spark a manufacturing revival. A rise in real wages underpins growing consumer demand and Britain's recovery. From 1933 to 1938 some 2.6 million jobs are created.

1939-1944: During World War II, the state assumes total control over the economy. Government regulation becomes ubiquitous. A host of ministries are created to direct and increase all aspects of production and supply and meet war demands. Vast physical destruction caused by bombing, the devastation of trade, and massive military expenditure backed by loans together wipe out a quarter of the empire's wealth.

1945-1950: The apparent success of Britain's wartime economy helps spur a change of direction. The new Labor government aims to continue state control of production and supply and maintain full employment. Nationalization brings entire industries -- coal, electricity, gas, iron, steel, railways, and road transport -- under state ownership. The "welfare state" is created to carry out public services.

1951-1955: The new Conservative government maintains the nationalized industries, returning only iron, steel, and road haulage to the private sector. The commitment to full employment is retained, and government spending increases. People see a better standard of living, but the defense budget, raised for the Korean War, is a serious burden, and the national health service proves more expensive than planned.

1956-1963: The 1956 Suez and sterling crises, together with rising inflation, cause a contraction in the British economy. A loan from the IMF temporarily stabilizes the situation. Britain's continuing stop-go three-year cycle sees growth resumed in 1957, with unemployment continuing to fall from its Depression-era peak, but the economy's persistent weakness remains.

1964-1969: Britain sees further sterling crises and balance of payments deficits as well as an international loss of confidence as Labor emphasizes social policies. Planning is instituted to try to improve economic performance and break the debilitating stop-go cycle. The first National Plan in 1965 outlines an optimistic blueprint for growth, while a new prices and income policy aims to hold back inflation.

1970-1974: Conservative Prime Minister Heath declares his intention to reverse Labor's wage and price policy, cut public spending, and overcome inflation. But in the face of the crisis Heath makes a U-turn, and resorts in the end to Labor's planning methods. A miners' strike and energy crisis leads to a three-day work week, a state of emergency, and collapse of the government.

1975-1978: Prime Minister Harold Wilson negotiates an end to the strike and three-day week as unemployment and inflation reach post-World War II record levels. The government launches a "Social Contract" with the unions, promising food subsidies and stricter price controls for cooperation and wage restraint. After another sterling crisis and IMF loan, union demands lead to more nationwide strikes.

1979-1982: Prime Minister Margaret Thatcher launches a monetarist revolution in Britain. Public expenditure and the basic rate of tax are cut, while interest rates are raised to deal with inflation. Unemployment soars, and the economy shrinks into a deep recession, but Thatcher refuses to make a U-turn and reflate the economy. A policy of privatization of the state-owned industries begins.

1983-1986: Thatcher urges people to rely on their own resources rather than welfare. Public housing is sold to boost property ownership. Privatization accelerates with more and more of the nationalized industries sold off into the private sector. Thatcher's victory in the miners' strike ends the unions' ability to hold the economy hostage. Unemployment falls, and growth resumes.

1987-1991: Dismantling the state-owned industries and abandoning the goal of full employment exacerbates regional economic differences. The service sector booms while industries like coal, steel, and shipbuilding continue to decline. But the boom turns to bust when 1987's Black Monday sees the world's stock markets plunge, and the government policy of shadowing the Deutsche Mark backfires.

1992-1996: The 1992 sterling crisis and the ensuing Black Wednesday fiasco, which forces Britain to withdraw from the European Exchange Rate Mechanism and devalue the pound, calls the government's economic policies into question. Despite having pledged not to increase taxes, Prime Minister John Major passes a series of tax increases to try to restore Britain's financial equilibrium.

1997-2001: Labor comes to power shorn of its manifesto Clause IV, which called for common ownership of the means of production. Labor now accepts privatization and fiscal and monetary restraint. Prime Minister Tony Blair outlines a "third way" between socialism and conservatism. With its liberalized financial system, Britain is the world's largest source and second largest recipient of foreign investment.

2002-2003: The global slowdown hits Britain with a manufacturing recession, increased bankruptcies, and inflation at 2.8 percent, a four-year high. But economic growth, though under 1 percent, is stronger than in other major European economies. The government faces a crucial decision: whether to advocate British adoption of the European common currency, the euro. A recommendation is promised for June 2003.

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1910: Urbanization and industrialization have brought with them social dislocation and urban poverty. Growing industrial militancy, fueled by demands for better pay and conditions, leads to widespread strikes. In London, 10,000 suffragettes take to the streets to back a motion that gives women the vote. The recent People's Budget that taxes the wealthy is joined by strident criticism of the aristocracy.

1911-1913: Following the creation of labor exchanges to deal with rising unemployment, the National Insurance Act is passed in 1911. One of Britain's most important pieces of social legislation, it lays the foundations for a welfare state. It provides certain tradesmen, known to be susceptible to cyclical unemployment, with benefits in time of slumps and provides health insurance to all workers when ill.

1914-1918: World War I is a major force for social change. With the conscription of all men aged 18 to 41 into the military, female employment rises dramatically. Women's new role leads to the questioning of traditional assumptions and to political, and to some extent economic and social, emancipation. The death of around 750,000 men results in the biggest change in land ownership since the Norman conquest.

1919-1926: The continuing decline of Britain's traditional industries, exacerbated by the conditions in postwar Europe, leads to growing unemployment and hardship and regional poverty. By 1925 it has become official government policy that workers must take pay cuts. Industrial action, resulting in the 1926 General Strike, provokes sharp social conflict across the country.

1927-1932: The onset of the Great Depression sparks soaring unemployment. The government even sets up 25 special labor camps where the long-term unemployed are set to work on futile projects. Among the poverty-stricken, tuberculosis becomes a serious problem, and since no health care is provided by the state, the poorest of families are hardest hit.

1933-1938: While unemployment remains high, the majority in Britain experience better living standards, shorter hours, longer holidays, and higher real wages. Consumer demand rises are met with an increasing number of cars, electrical appliances, and radios. A housing boom sees three million homes built, slum clearance programs enacted, and public housing provided.

1939-1944: World War II transforms the state-society relationship: Government scrutiny is omnipresent. Strict rationing becomes the norm for more than a decade. Mass evacuation of children from targeted cities is the biggest state-led move of civilians in British history. The 1942 Beveridge Report identifies five great ills -- want, disease, ignorance, squalor, idleness -- and calls for welfare programs.

1945-1951: Based on the tenets of the Beveridge Report, Labor proposes the creation of a "welfare state" as an alternative to a "warfare state." It nationalizes and centralizes comprehensive social security benefits, including unemployment, pensions, and free universal medical care. The 1948 British Nationality Act guarantees freedom of entry from the Commonwealth, boosting immigration to meet labor shortages.

1952-1959: A surge in automobile use has a dramatic impact on social trends: A major increase in commuting from newly created suburbs marks a distinct separation between home and work. The advent of and rising access to television causes a massive change in traditional pastimes, as television becomes central to social life.

1960-1975: The 1960s see an extraordinary change in youth and gender expectations. Youth culture, feminism, and the end of the dominance of the Christian moral framework are the orders of the day. With society's secularization come sexual liberalism, abortion rights, and decriminalization of homosexuality. Immigration changes the racial make-up of many areas as the Asian community grows.

1976-1989: The decline of Britain's traditional industries is brought to a head when Margaret Thatcher cuts subsidies and starts privatization. Rising localized unemployment damages whole communities and strains social cohesion. The gap between the haves and have-nots, between rich and poor areas, widens dramatically. Ethnic tensions, especially in London's Brixton neighborhood, lead to small-scale riots.

1990-1996: The end of Sunday trading restrictions and the availability of 24-hour stores blurs the traditional distinction between weekends and workdays. Shopping becomes the most popular leisure activity. In 1992 Britain signs the Maastricht Treaty but opts out of its Social Chapter, choosing to keep workers' rights a national issue, not one governed by European regulations.

1997-2001: The new Labor government adopts the Social Chapter of the Maastricht Treaty, giving British workers further rights and protections, from paternity leave to statutory paid holiday leave and a minimum wage. A motion to curb hunting sparks a well-organized backlash from the Countryside Alliance, which declares the government is out of touch with rural affairs.

2002-2003: The Labor Party dominates the political agenda but proposes only incremental social reforms. Ending an old tradition, pubs are allowed to remain open all day. A slackening economy begins to raise worries. Strong public antiwar sentiment exposes Prime Minister Blair to criticism for his close alliance with the U.S. in the campaign against Iraq. Massive street protests result.

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1910-1925: Britain's industrialization and urbanization continue at a rapid pace. The burning of coal in factories and heavy industrial plants, as well as in people's homes, where it is the main source of heating, leads to a dramatic increase in air-pollutant emissions. This pollution results in the persistent smogs, widely known as "pea soupers," that are common in many of Britain's inner cities.

1926-1931: Between 1926 and 1928, Councils for the Preservation of Rural England, Scotland, and Wales are established, doing much to focus attention on the increasing pressures and rapid changes affecting Britain's countryside. There is growing public recognition of the need to conserve areas of national importance.

1932-1938: The first Town and Country Planning Act enables local authorities to plan the use of the countryside and prevent undesirable development, but it does not allow them to specify areas for conservation. In 1935 a Committee on National Parks is created, and in 1938 the Green Belt designation is established, aiming to keep rural land around big cities free of development and urban encroachment.

1939-1951: During World War II, the Scott Committee drafts a report on Land Utilization in Rural Areas that backs the need for a network of nature reserves and national parks for the benefit of the public. In 1949 the report becomes law with the National Parks and Access to the Countryside Act, which sets up several parks, among them the Peak District, Lake District, Snowdonia, and Dartmoor.

1952-1956: Despite improvements in air quality, one of Britain's worst smogs hits London in 1952. It lasts five days and is blamed for 4,000 deaths. In 1956 the government passes the Clean Air Act. It sets out the use of cleaner fuel and controls on domestic smoke pollution.

1957: A fire at Britain's Windscale nuclear complex, since renamed Sellafield, destroys the core of a plutonium-producing reactor, sending clouds of radioactive material into the atmosphere. An official report admits the leaked radiation may lead to dozens of cancer deaths.

1958-1965: After a series of town development acts, all parts of Britain are now under uniform planning guidelines. Undesirable planning applications can be rejected, but the presumption remains heavily in favor of development and growth. Environmental considerations are significant only in areas designated Green Belt, National Parks, Areas of Outstanding Beauty, or Sites of Special Scientific Interest.

1966-1968: The collapse of an unstable coal spoil heap at Aberfan in South Wales results in a human tragedy that leads to the questioning of the National Coal Board's ability to handle such crises. The event has wide environmental impact and leads to the rehabilitation of disused industrial and mining landscapes.

1969-1972: The period of the late '60s and early '70s sees an upsurge in Britain's environmental movement. The public shows increasing concern at the sacrifice of the environment in the name of development. They challenge the long-held primacy of economic growth, employment, and profit over environmental considerations.

1973-1989: Following Britain's entry into the European Economic Community (EEC), now the European Union (EU), Britain must comply with European legislation aimed at controlling environmental degradation and the amount of pollution emitted by sources such as transport and industry.

1990-1996: In response to European legislation, Britain passes the 1990 Environmental Protection Act and subsequent 1995 Environment Act. These bring smaller emission sources under air-pollution control by local authorities and provide a new statutory framework for air-quality management. The most polluting industrial processes become subject to a system of Integrated Pollution Control.

1997: Britain signs the Kyoto international agreement on the reduction of the release of harmful gases. In the same year, Britain's National Air-Quality Strategy is published, setting down air-quality standards and targets to be achieved in the country by 2005.

1998-2003: The government's plan to meet projected demand for 4.4 million extra homes in England by 2016 leads to concern over the balance between development and conservation. Environmental laws of the '90s pay off when Britain's rivers are found to be at the cleanest levels ever recorded. London introduces a steep "congestion charge," monitored and levied electronically, on cars entering the city's center.

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Rule of Law

1910: Britain has no written constitution, but rather a set of conventions, customs, and statutes. Only Parliament may enact or change laws, but any person can take proceedings against the government to protect their legal rights. "Habeas corpus" enshrines freedom from unlawful or arbitrary detention. In principle, English and colonial subjects have similar legal protections and commercial liberty.

1911-1940: Despite increasing social and industrial unrest, even leading to strikes that require suppression by the police or army, Britain remains for the most part a law-abiding society. The start of the Irish war for independence and the creation of the Irish Republican Army (IRA) in 1919 lead to a guerilla conflict, including terrorist acts on the British mainland, that lasts the whole century.

1941-1950: Franklin Roosevelt and Winston Churchill sign the Atlantic Charter, forging a postwar commitment to the hope "that all men in all the lands may live out their lives in freedom from want and fear."

1951-1959: Britain is the first country to ratify the European Convention on Human Rights and Fundamental Freedoms in March 1951. The convention establishes the most effective international system of human rights protection yet invented.

1960-1980: The period after 1960 sees a determined effort by successive governments to tackle the problem of racism. The 1965 Race Relations Act makes racial discrimination illegal and is followed by a number of bills giving the Race Relations Board more powers. In the same year, the Murder Act leads to the abolition of the death penalty and the end of hanging in Britain.

1981-1989: Attempts to crack down on high levels of street crime spark riots in South London's Brixton neighborhood and violent clashes between the police and mainly nonwhite demonstrators. Riots spread through England. Allegations of police brutality coupled with a 1983 report condemning the police as bigoted, racist, and sexist damage the respect the police have traditionally enjoyed.

1990-1997: In 1990 Margaret Thatcher's introduction of the poll tax breeds resentment, which in turn leads to mass demonstrations and violence in London, and eventual repeal of the measure. The following year, the Harare Declaration unites Britain and Commonwealth member countries in the goals of upholding democracy, rule of law, good governance, and social justice.

1998: The 1998 Human Rights Act gives Britain its first full Bill of Rights; for the first time, individuals have a range of overarching civil rights enforceable in all British courts. The act incorporates into British law the European Convention on Human Rights. Public authorities are obliged to respect all rights laid down by the European convention.

1999-2003: The British government's tough reaction to an increase in violent crime raises worries that a pillar of civil rights, trial by jury, may be sacrificed. In the aftermath of September 11 an antiterrorism bill is proposed, including detention without trial, that critics fear will undermine the rule of law and civil liberties. Other reforms expand on-the-spot fines and a crackdown on sex offenders.

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Trade Policy

1910-1913: Despite growing competition, Britain remains the world's largest trading and merchant shipping nation. Free trade, a canon of British life for 50 years, is now under increasing political attack. Opponents favor imperial preference, a proposed system of lower duties for goods within the empire which they suggest will help tie the empire together, raise revenue, and protect British industry.

1914-1918: World war has a dramatic impact on Britain's trade policy. With sea lanes and vital trade routes under threat, the state seeks total control of the country's trade. Free trade, the holy grail of laissez-faire liberalism, is abandoned, and duties of up to 50 percent are imposed on luxury imports. The war's disruption results in Britain's overseas trade falling by one-third.

1919-1923: After the war, tariffs on trade, at home and overseas, are removed. Four years later, Stanley Baldwin, the new Conservative prime minister, pushes for the reintroduction of protectionism. It is such a key issue that it precipitates another general election. Free trade becomes a dividing line for the political parties, and the vote goes against Baldwin's plan.

1924-1932: In 1932 Britain's Conservative-dominated national government again forces the old debate over free trade and tariff reform. In a bid to secure raw materials and cheap food, Import Duties Bill 32 is passed, a 10 percent tariff imposed, and free trade killed off. In the same year, in Ottawa, Britain institutes imperial preference, establishing tariffs that favor Commonwealth imports.

1933-1944: Britain's trade deficit continues to grow as exports decline. World War II causes exports and trade to collapse. Germany's attack on the Atlantic sea lanes destroys millions of tons of shipping, devastating vital imports of food and raw materials. Britain fights to keep the routes open. In 1941 Britain and the U.S. sign the Atlantic Charter, expressing the ideal of free nondiscriminatory trade.

1945-1951: Britain emerges from the war stripped of two-thirds of its export trade. It has nothing to export and no way to pay for imports. America's loans require that the pound be made freely convertible. The independence of India marks a retreat from empire that forces an adjustment to new trade networks.

1952-1958: Britain's share of world trade falls by about 1 percent per year. By 1952 the European Coal and Steel Community is under way, but, failing to grasp its significance, Britain is uninvolved. Churchill sees the U.S. as the basis of Britain's prosperity. When the European Common Market is born in 1957, Britain again stays out, thus cut off from the astonishing growth of European production and trade.

1959-1967: In 1959 Britain and six other nations set up the European Free Trade Association (EFTA) to rival the Common Market. EFTA aims to help Britain's way into Europe without damaging the Commonwealth trade agreements, still a key part of the nation's trade policy. When Britain does attempt to join the renamed European Economic Community (EEC), France vetoes its entry.

1968-1973: In the face of the continuing balance-of-payments crisis, Prime Minister Edward Heath launches Britain's third entry bid to the EEC in 1970, hoping that European integration will stimulate recovery. Britain's admission in 1973 requires the acceptance of the higher food costs of the Common Agricultural Policy and gradual prohibition of cheap food imports from the Commonwealth.

1974-1978: Joining the EEC causes a major reorientation of trade flows, but despite renegotiating the terms of EEC membership in Britain's favor, membership is still a hotly debated issue within the Cabinet. A national referendum is called in 1975, causing a great split in government. The public, however, votes overwhelmingly in support of staying in.

1979-1989: In 1979 Margaret Thatcher argues that because of Britain's other trading interests, including those with the Commonwealth, its tariff contribution is disproportionately large, and that Britain is becoming a net contributor to the budget of the EEC. In 1984 she secures a substantial rebate from the EEC.

1990-1996: BSE, commonly known as "mad cow disease," leads to a ban in 1990 on beef imports from France, Austria, West Germany, and the USSR. The Maastricht Treaty in 1992 commits members of the EEC to closer political and economic integration. Following Britain's withdrawal from the Exchange Rate Mechanism (ERM) and sterling's collapse in 1992, exports start to increase, and recession starts to fade.

1997-2001: Trade with Europe increases, but the U.S. remains Britain's largest export market and second largest supplier. Trade remains key to the economy, with the value of imports and exports representing nearly half its GDP. Export growth produces the first balance-of-payments surplus in more than a decade. The Labor government pursues a policy of trade liberalization and plays a key role in trade talks.

2002-2003: The UK trade deficit reaches its highest level ever (though not as a proportion of GDP), due to the manufacturing recession and the global slowdown. Debate is keen as to whether Britain should adopt the euro. Britain's trade with the euro-zone has been declining, while euro members' trade among themselves has increased, and many in British business fear isolation and loss of markets.

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1910-1913: Britain is the biggest overseas investor in the world, accounting for more than 40 percent of the world total, and draws a tenth of its national income from its foreign investments. The City of London is the world's financial and commercial center, and banking and insurance profits help make up for an adverse balance of payments.

1914-1918: At the outset of World War I in 1914, Britain, like most other countries, suspends gold payments, the basis of the international gold standard, preferring to husband reserves for essential war needs. Income tax is doubled, but huge war costs dwarf revenues. Britain grows dependent on loans from the U.S., and by 1918, war debts stand at more than £850 million.

1919-1924: Britain's financial position is devastated after the war. No longer a creditor, now it is a debtor nation. Interest payments alone consume 40 percent of government spending. Britain itself is owed vast sums by Russia and others, as well as German reparations, but receives almost nothing. In 1919 meager gold reserves and a large trade deficit result in the formal abandonment of the gold standard.

1925-1930: In 1925 Britain returns to the gold standard at its pre-1914 parity. Other industrial countries soon join the attempt to restore stability to a world economy racked by violent cyclical swings in prices and activity. But the gold standard makes sterling overvalued, hampering exports and excluding Britain from the boom in the U.S. and continental Europe.

1931: Following the collapse of banks in Europe, a run on gold in British banks threatens the stability of the pound. In 1931, after the resignation of Ramsay MacDonald's Labor government, the new national government fights to save the pound against speculators, but with reserves exhausted, the pound is devalued by 30 percent and taken off the gold standard.

1932-1938: Following the Ottawa conference, Britain establishes the sterling block, strengthening the economic links within the empire. All dominion and colonial reserves are to be in pounds and the exchange rates of their individual currencies to be pegged against the pound. Sterling remains the number one reserve currency in the world, helping to maintain Britain's position of financial hegemony.

1939-1945: To pay for its war effort, Britain borrows from deposits of sterling block countries, liquidates overseas holdings, and sells gold and dollar reserves. Assets are exhausted by 1941, and only the U.S. Lend Lease Act averts bankruptcy, extending Britain a line of credit due for repayment after the war. By 1945 Britain is once again one of the world's biggest debtors.

1946-1947: The full total of Britain, the Commonwealth, and the Empire's debt after World War II is $30 billion. With the Lend Lease agreement over, John Maynard Keynes brokers a U.S. loan for $3.75 billion and a Canadian loan of $1.25 billion. But the U.S. loan requires that sterling be made a fully convertible currency, resulting in a run on the pound and a convertibility crisis.

1948-1955: The U.S. Marshall plan provides $1.26 billion of aid to help rebuild Britain. Speculative pressure increases on the pound, and in 1949 sterling is devalued by almost 31 percent, a major realignment with the dollar. The devaluation leads to an immediate rise in the cost of living and essential imports, but sets the basis for an increase in Britain's competitiveness.

1956-1963: The Suez crisis worries foreign holders of sterling, who fear their assets, like Egypt's, might be frozen if they step out of line. A run on the pound ensues as millions are withdrawn from sterling accounts. Britain's appeal to the IMF is vetoed by the United States, but when Britain withdraws from Egypt, the U.S. relents, and a $1.3 billion loan stabilizes the pound.

1964-1966: Britain's troubled economy provokes international speculation, wreaking havoc with the pound. The government tries to stabilize sterling by releasing money into the markets, running down Britain's reserves. Interest rates are raised by 2 percent, and sterling steadies, but the speculators return. Central bankers from 11 nations offer $3 billion to balance sterling against speculation.

1967-1970: Britain's by now usual balance-of-payments deficit and general economic crisis inspire a loss of faith in sterling and another run on the pound. Rather than accept a U.S. offer to underwrite sterling or arrange another IMF loan, Labor Prime Minister Callaghan devalues the pound by 14.3 percent. Central bankers agree to $3 billion of credits to protect the reserves against further speculation.

1971: On February 15 Britain goes decimal, part of Prime Minister Edward Heath's modernization drive. The historic half-crown, florin, shilling, and sixpence coins are made obsolete. The pound sterling remains, but instead of 20 shillings to the pound, there are now 100 pennies. The system is logical, but for many people the transformation is bewildering.

1972-1975: Inflation, a record trade deficit, and rapid deterioration in the economy lead to a sterling crisis in 1972. Chancellor Anthony Barber abandons the fixed-parity agreement of 1971 and lets the pound float freely for the first time since the 1930s. It loses 8 percent of its value. Britain's entry into the EEC in 1973 marks an initial step towards monetary union.

1976-1978: Failure to contain public-sector borrowing and to arrest Britain's economic decline leads to another crisis of confidence in the pound. The Bank of England must reverse its secret strategy of selling sterling and buy back huge amounts to prop up the currency. Its value falls by 24 percent, and Britain is forced to go again to the IMF for a loan of £2.3 billion, the most it is allowed to borrow.

1979-1984: High interest rates and large North Sea oil exports lead to a rise in sterling. Margaret Thatcher argues it is impossible to have an independent monetary policy and belong to a fixed exchange rates system. The abolition of exchange controls and liberalization of the financial system helps the City boom, promoting foreign investment in Britain and British investment abroad.

1985-1989: Political arguments rage over Britain's relationship with the Exchange Rate Mechanism (ERM), which ties EEC currencies to the Deutsche Mark (DM). In 1985 Thatcher refuses to back Chancellor Nigel Lawson's wish to join the ERM. By the end of 1986, Lawson on his own authority pursues a policy of shadowing the DM that requires wild swings in interest rates and results in rising inflation.

1990-1991: Britain joins the ERM amid political infighting, in the middle of a recession, with an inflation rate topping 10 percent and a high pound. Thatcher demands that European leaders disavow the idea of a single European currency. She is ignored. Instead they agree on the establishment of a European Central Bank to control the monetary policies of all member states within four years.

1992-1996: Germany's economic problems compound the pound's original ERM overvaluation to put pressure on the currency. Speculation drives the pound lower, making its position in the ERM untenable, and so forces its withdrawal. But sterling's effective devaluation and its new flexibility allow for a decade of growth. In 1992 Britain secures an opt-out clause on the single currency at Maastricht.

1997-2001: Britain's new Labor government keeps its pre-election promise not to raise income tax. One of Tony Blair's first and boldest moves is to make the Bank of England independent, investing it with the power to determine interest-rate policy without government consultation. Joining the single European currency is hotly debated but the question deferred til after the 2001 election.

2002-2003: The advent of the euro diminishes the appeal of the pound as a global reference currency. Supporters of Britain's adopting the euro argue that opting out has diverted foreign investment from the UK to the euro-zone and hurt British trade. The government promises to assess its economic tests on the euro in June 2003 and to recommend whether to hold a referendum on joining.

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