As we wish HM The Queen many congratulations on her Platinum Jubilee and look forward to the celebrations over the four-day bank holiday, we take a look back at the economic situation in 1952.
Elizabeth II acceded to the throne in February 1952, with her Coronation taking place in June the following year. Her Government under Prime Minister, Winston Churchill was facing a difficult economic position.
A rising balance of payments deficit, rising defence spending and falling productivity formed the backdrop for R A Butler, the then Chancellor of the Exchequer’s Budget Speech on 11 March 1952.
Mr Butler opened his speech with:
“The issues we face are serious indeed. What we do will largely determine not only our economic outlook for next year, but our entire future.”
In a move, reminiscent of Mr Sunak’s actions last week, Mr Butler went on to announce an Excess Profits Levy on inflated company profits arising from the outbreak of the Korean War. Radical changes to Income Tax were also announced, partly funded by the Excess Profits Levy. He increased allowances and decreased the tax rates to encourage people to work harder, knowing they could enjoy the “proper reward” for doing so.
In 1952 the average property cost £1,981 compared to £260,771 today. The average take home pay was £9 a week compared to £552 now, a mid-range car cost £507 (about a year’s salary) and a pint of milk cost 4p. Electricity cost less than a £1 a week but at a time when the heat source for your home was likely to be a coal fire.
Bearing in mind £1 in 1952 is worth £30 today, and even with inflation running at a 40 year high in the UK today, the average family is almost twice as well off today as they would have been in 1952.
Being better off, relative to the 1950’s is little comfort to those struggling to make ends meet today. Although the support measures announced by the Chancellor last week may offer some relief for households, but both consumer and business confidence seem to be wavering. Difficult economic conditions, shaped by the world stage, are a common thread.
Against the backdrop of the Korean War, a changing Commonwealth, the infancy of NATO and a post war Europe, in her first Queen’s Speech to Parliament in 1952, Her Majesty said:
“My Government will proceed resolutely with the task of placing the national economy on a sound foundation.”
“In the interests of employment and the standard of living of My people, My Government will persevere with measures to curb inflation and to reduce the heavy load of Government expenditure.”
Much the same instruction, could be given today.
