British Economic Difficulties 1970s- Britain’s Delay in Joining the EEC

It seems that since the creation of the EEC in 1957, British membership of the economic community has been a controversial issue. Whereas today one cannot turn on the TV without hearing about the seemingly disastrous uncertain cliff edge Brexit represents, back in the 1960s and 70s it was Britain who was adamant to join the EU to be a part of the ever growing gravy train of export markets. In fact, one could go as far to argue that it was Britain’s delayed joining of the EEC that allowed the structural inadequacies of the British economy to develop, and therefore meant that Britain lagged behind her European competitors in terms of productivity and international competitiveness.

The “Treaty of Rome” was signed on 25th March 1957, bringing together 6 European countries:, Italy, France, Belgium, Luxembourg, Holland and West Germany. The treaty marked the beginning of the integration of European countries that would soon form the EEC, and eventually combine to form the EU in 1990.

treaty of rome.jpg
Treaty of Rome – 1953

The Treaty of Rome granted its signatory states a full customs union between members, meaning that goods and services could be imported and exported without tariffs.

Therefore, throughout the 1960s growing European powers such as West Germany and France were encouraged to import foreign capital to enhance their own productive capabilities, allowing them to then export their productive surplus to maintain a favourable balance of payments.

However, during the 1960s the UK suffered the inverse of these positives (falling levels of productivity matched by an emerging trade deficit). Therefore, it becomes apparent that surely, by not joining the EEC in the Treaty of Rome, Britain were unable to match the same levels of economic prosperity that European rivals such as France and West Germany enjoyed.

Conservative MP Anthony Nutting articulated in his book “Europe Will Not Wait”, that Britain had lost its ability to “mould Europe” into a vehicle that would benefit Britain and allow it to become the leader of Europe in terms of economic growth. Nutting popularised the phrase that Britain had effectively “missed the bus” in terms of losing out in trade deals due to not being a part of the European free trade bloc from the start.

Indeed, Britain recognised the extent to which they were suffering due to not being part of this gravy train in the form of free trade, hence Alec Douglas-Holme began their application process to join the EEC in 1961. However, at the time, in order to recruit a new signatory state to the EEC, it was necessary for all member states to agree on the new addition. Luxembourg, Italy, Belgium, the Netherlands, and Germany all agreed that British membership would be collectively advantageous. However, France’s Charles De Gaulle was adamant that a British membership would see the ultimate breakup of the community. He stated that Britain had a “deep-seated hostility” towards European integration (in 2016 we can see he had a point), whilst London itself had a “lack of interest” in the trade bloc.  As such, he rejected British application for membership in 1963, and then again in 1967.

Ultimately, Britain were accepted into the EEC by De Gaulle’s successor, George Pompidou, in 1973. However, had Britain been able to join the EEC at an earlier period, then arguably there would have been a reduction in the difficulties faced by Britain during the 1970s. Indeed, the figure below shows that by Britain not being a member of the EEC from 1957-1973, European importers (such as Germany) were continually becoming less reliant on British exports. However, in the 7 years following  Britain’s joining of the EEC, Britain began to dominate German imports, increasing their market share by 136%.

Better in than out EEC
A clear example of how Britain’s membership of the EEC contributed towards an improvement in X – The Economist 

Therefore, surely had Britain been able to capitalise earlier on the export driven growth that membership of the EEC generated, there would have been a greater increase in productivity and output through foreign investment, and therefore Britain would have experienced comparatively fewer difficulties in matching European international competitiveness for exports.

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