Why was unemployment such a persistent problem in Britain during the inter war years?
Unemployment was an important feature after the First World War and a conditioning influence on the economy and society. The inter-war years saw Britain fail to recapture its control over markets that it had dominated once before through its staple industries and saw USA and Germany become leading international producers. Alongside misguided international and domestic policies, unemployment was an important feature of Britain during the inter-war period.
The Armistice of late 1918 was followed by a short re-stocking boom. For eighteen months after the war, industrial output expanded as export markets boomed and consumer's at home capitalised on this, making up for their wartime shortages. By the autumn of 1920 this boom had spent it self and the trends that had become apparent before 1914 began to re-assert themselves. They did so, however in the context of a world economy which now differed in some important respects from the pre-war one.
Britain's international trading position had deteriorated sharply. Fundamental to Britain's economic development leading to 1914 was the staple industries - coal, iron and steel, cotton, woollen textiles and major branches of engineering, mainly shipbuilding, After the war, these industries fell into deep depression damaging the British economy, mostly due to the reliance of the British economy on exporting these goods.
In the coal mining industry the period between the wars saw the industry suffer drastically from seriously declining markets. Electricity was now beginning to compete effectively with coal both in the home and the factory, although much of the electricity was made from coal, it used fuel more economically. Furthermore, the governments of some foreign coal producing countries subsided their exports so that they were able to oust British coal from continental markets.