Analysis
From Elizabeth II to Charles III: how the UK
economy has changed
Larry
Elliott
Economics
editor
From rationing to taxes, house prices to health – the
differences and similarities between the Britains of 1953 and 2023
Thu 4 May
2023 10.00 BST
Double-digit
inflation prompted by a regional war. Essential goods in short supply in the
shops. Shortages of workers. In some respects the economy when Charles III is
crowned king this week has distinct echoes of his mother’s coronation 70 years
ago.
In other
respects, Britain is an entirely different place. In 1953, the retreat from
empire was under way, the welfare state was in its infancy and membership of
the European Economic Community was two decades away.
So what are
the differences – and similarities – between the Britain of 2023 and the one of
seven decades ago?
1 Growth and living standards
The
contrast between today’s stagnant economy and the optimism that accompanied the
rapid expansion of the early 1950s could hardly be more marked. The new
Elizabethan Age got off to a rip-roaring start, with 1953 witnessing growth of
5.4% – the highest of the 1950s. It wasn’t just Britain; the world economy was
in the early stages of a sustained postwar boom that would go on uninterrupted
until the early 1970s. Despite the flatlining of real incomes in recent years,
Britain is a much richer country today – and a much more service-sector
dominated economy – than it was in 1953. Manufacturing accounted for a third of
the economy compared with less than 10% today, while living standards are 4.5
times higher than they were seven decades ago.
2 Quality of life
As well as
being richer, people also live longer. The average life expectancy at the time
of Elizabeth II’s coronation was just over 69, but it rose steadily over the
subsequent decades to peak at more than 81 by the early 2010s, since when it
has declined slightly. Infant mortality has fallen from 29 per 1,000 live
births to 3.7 per 1,000. At the start of the 1950s fewer than half the homes in
Britain had a bathroom. Air quality has improved as use of coal as fuel has
fallen. Six months before the 1953 coronation, London was gripped by the Great
Smog, when thousands were killed by the pollution trapped by cold weather and a
lack of wind. Rationing of sugar was still in force until September 1953 and it
took until the following year for limits on purchases of meat to be lifted.
Only one-third of working age women had jobs in the early 1950s compared with
just under 73% today.
3 Bricks and mortar
Back in
1953, it was possible to buy a house for the monthly cost of servicing some
mortgages today. According to the Nationwide building society, the average cost
of a home in the UK now stands at just over £260,000 – 130 times as much as the
average property price 70 years ago. Higher levels of owner-occupation have
resulted in wealth becoming less concentrated, with the share owned by the top
1% falling from just under 50% to just over 20%. But the chances of young
people following their parents and grandparents on to the housing ladder have
been hit by a combination of high prices and limited supply. In 1953, almost
327,000 new homes were completed, of which more than two-thirds were built by
local authorities. In 2020, the last year for which official figures are
available, completions stood at 170,000, of which only 2,630 were local
authority-built.
4 Technology
For many
people, the 1953 coronation was their first experience of TV, although they
probably had to go round to a neighbour’s house to watch the black-and-white
footage on a tiny screen on the only TV channel then available. Fewer than 2m
homes had a TV set at the start of 1953, but the coronation prompted strong
demand for sets, paving the way for the launch of the first commercial channel
two years later. For a generation that has grown up with smartphones and
streaming services, the technology of the early 1950s would seem rudimentary.
It was a time when only 10% of households had a telephone, and music was
listened to on the radio or on gramophones playing 78rpm discs. There were no
such things as personal computers.
5 The public finances and tax
Taxes were
high in 1953 but not as high as they are today. According to figures from the
Office for Budget Responsibility, government revenues as a share of national
output (gross domestic product) hit a postwar peak of 43.3% in the late 1940s
and had come down to 38% by 1953-54 and were on course to drop below 34% by the
start of the 1960s. Receipts in 2023-24 are expected to total 41.1% of GDP,
rising slightly over the coming years. The national debt – the accumulation of
government borrowing down the years – had risen sharply during the second world
war and peaked at just over 250% of GDP in 1946-47. By 1953-54, it was just
over 152% of GDP, still considerably higher than the 103% pencilled in by the
OBR for 2023-24. Government spending on defence stood at 11% of GDP during the
Korean war while health spending was 3% of GDP. Today those figures have been
reversed: health spending is 11% of GDP, defence spending 2% of GDP.
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