1960-1979: The Sixties and Seventies

During the 1960s, the slogan used by Prime Minister Harold Macmillan "(most of) our people have never had it so good" seemed increasingly hollow. The Conservative Government presided over a 'stop-go' economy as it tried to prevent inflation spiralling out of control without snuffing out economic growth. The Labour Party under Harold Wilson from 1966-1970 was unable to provide a solution either, and eventually was forced to devalue the Pound again in 1967.

Both political parties had come to the conclusion that Britain needed to enter the European Economic Community (EEC) in order to revive her economy. This decision came after establishing a European Free Trade Association (EFTA) with other, non EEC countries since this provided little economic stimulus to Britain's economy.

However, with the decline of Britain's economy during the 1960s, the trade unions began to strike leading to a complete breakdown with both the Labour Government of Harold Wilson and later with the Conservative Government of Edward Heath (1970-1974).

1979-1990: The Thatcher era

When Margaret Thatcher became Prime Minister in 1979, her main priorities were to reduce the role of the state in the economy and to reduce the power of the unions and their ability to paralyse the economy. She also applied monetarist policies to reduce inflation, and reduced public spending. Her rhetoric was of a trimmer civil service and good housekeeping. Major state controlled firms were privatised, including British Aerospace (1981), British Telecom (1984), British Leyland (1984), Rolls-Royce (1987), and British Steel (1988). The electricity, gas and English water industries were split up and sold off. The ultimate success of Thatcher's approach has been contested.

Since 1973, the UK has been a member of the European Union. Various British governments have signed on to measures which have been aimed at improving economic conditions, such as the Single European Act (SEA), signed by Margaret Thatcher. This allowed for the free movement of goods within the European Union area.

Exchange controls, in operation since the war, were abolished in 1979. British net assets abroad rose approximately ninefold from £12 billion at the end of 1979 to nearly £110 billion at the end of 1986. Privatisation of nationalised industries increased share ownership in Britain.

During much of the 1980s Britain experienced a period of boom, including an unprecedented housing boom. The period was also characterised by continued social strife. Unemployment skyrocketed and social ills such as homelessness and absolute poverty, became common features of British life again. While the policies of "Thatcherism" took hold in Britain, a similar set of policies were also being adopted in the U.S. through so called "Reaganomics", named for the American president, Ronald Reagan, who championed them.

It is not clear whether Thatcherism was the only reason for the boom in Britain in the 1980s, as there was also a world wide boom around the same time. However many of the economic policies put in place by the Thatcher governments have been kept since, and the Labour Party which had once been so opposed to the policies had by the late 1990s quietly dropped all opposition to them.