Full text: Wirtschaft und Gesellschaft - 1996 Heft 3 (3)

22. Jahrgang (1996), Heft 3 Wirtschaft und Gesellschaft 
nally successful European countries: the smaller gap was not due to Bri­
tish improvement, but to EU deterioration; not a case of " catch up" but 
one of "catch down" . 
Table 1 :  
The Economic Record: an  Overview 
1960-73 1973-79 1960-79 1979-95 
Real GDP (annual average 
growth rates) 
Britain 3 ,2 1 ,5  2 ,6  1 ,9  
EU 4,8  2 ,5  4 , 1  2 , 1  
Unemployment Rates 
Britain *3 ,2 5 , 1  4 ,0  9 ,0  
EU * 1 ,5 *3 ,7  *2 ,2 8 ,7 
Inflation Rates 
Britain 5 ,2  15 ,6  8 ,5  6 ,5  
EU 4,6 10,9 6 ,6 6 ,4 
Source: OECD. 
* Not strictly comparable. 
In addition the indicators conceal - as averages - fluctuations in eco­
nomic activity, which in the 1980s were very much more pronounced 
than they had been in the 1960s, and also than those of most other coun­
tries. Inflation spiralled, fell, and spiralled once more over the years and 
so did unemployment, while Gdp growth rates first plummetted, then 
rose, and finally fell sharply again. In 1996,  Gdp growth is marginally 
higher than in other large economies of the EU (in part thanks to their 
attempts to attain the EMU convergence criteria) but well below its 
long-term production potential. The government had undertaken to 
"squeeze out" inflation and to end for good inflationary expectations: 
basing itself on the ideologically convenient natural rate of unemploy­
ment approach, the concept of "non-accelerating inflation rate of unem­
ployment" (which conveniently implies that there are clear limits to a 
government's capability of lowering unemployment); it claimed that the 
cost in terms of growth foregone and of unemployment would be strictly 
limited and temporary and that growth and employment would then rise 
strongly. But this did not happen: the massive rise in unemployment had 
itself worsened the economic environment, reduced labour skills and 
productive capacities and raised the "natural rate" . Employment and 
unemployment never recovered fully, even long after the presumed 
causes of low employment and high unemployment had been overcome. 
Altogether, we see a very mediocre economic performance, in stark 
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