Impact of the Depression on the British economy (3.7)

The decline of heavy industry

WW1 - new tech and changed markets, hevay industry failed to adapt, labourers suffered
brief boom in shipbuilding after the war
collapse in world trade meant no demand for new ships and in 1933 they only produced 7% of their pre-war output
coal - exports fell from an immediate post-war output of 100 million tonnes per year to around 50 million tonnes by 1930
cheap iron and steel flooded in from Europe in the 1920s, causing the demand for British iron and steel to fall
prodcution of steel fell by 45%
after the war, cheaper cotton goods from the USA and the Far East flooded the market and undercut the British cotton industry
many were thrust iinto long-term poverty because there was simply no other jobs

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Motor vehicles and light industry flourished
Mckenna duties - intended to be temporary, put a 33.3% tariff on the importing of commerical vehicles, remained until 1956
safeguarding of insutries act of 1921 - to protect industries against foreign competition and introduced a 33.3% tariff on foreign imports
the steel industry suffered from the practice of differential pricing - producers could sell the same product to diffferent customers at different prices
the consumer decided to buy cheap, and that wasn't British
cotton, iron and steel, and shipbuilding were heavily overcapitalised in a markert where few wanted what these industries produced

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British exporters lost markets abroad because their industries were geared up to war production
Japan benefited from Britain's temporary withdrawl from world trade and began flooding the developing world with Japanese products
Countries such as India developed their own iron, steel and textile industries - 1919 they introduced tariffs against British goods even though they were still part of the British Empire
Challenged by the USA
Gold standard collapsed
After 1918, the world's financial markets struggled to get back to normal - some had to go back on the gold standard
April 1925 - Britain went back on the gold standard
the price of gold was high and this amde British exports expensive
The US government erected high tariff barriers iin order to protect home consumptioon, and recalled the loans ti had made to foreign governments
world trade collapsed and unemployment rose in all European countries

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Britain was one of the first countries to be affected by the USA's collapse:

The USA was Britain's biggets trading partner. There were very limited markets where British manufacturers could sell their goods
The income from trade with the USA was the main way in which Britain raised money to repay debts incurred as a result of WW1, the government could not meet its debt repayments
Britain was owed money by most of the WW1 allies (Russia, Italy and France) but they were in a similar situation and could not afford to make repayments
The situation was exacerbated by Britain's return to the gold standard

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Heavy industry concentrated inn the north and north-east, so affected badly
The Midlands and south-east were relatively proseperous
The skills of the workforce were readily adapted to the new, light industries that were being developed after WW1
these led to investment in these industries, that led to growth and fuller employment
the shipyards, for example, employed people with very specific and mainly non-transferable skills - when these industries collapsed there was nowhere for the workforce to go
new, light industries able to meet the post-war demands
growth of the building industries, electrical engineering, chemical and printing trades
the housing industry revived and in the early 1930s was responsible for the most rapid rate of house buildiing in British history
Between 1924 and 1935, over one million houses were built for local authorities to rent out to council house tenants, and double that number for built for private purchase
All these houses needed furnishing and equipping with consumer durables, which in turn stimulated demand in those industries

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