What Caused the high level of unemployment in the interwar period in Britain? Could the government have done more to cure the problem?

Essay by sam_spadeUniversity, Bachelor'sB, April 2004

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The interwar period from 1919 to 1939 was a time of turmoil and hardship throughout Britain. The first world war tested the economy at a time when Britain's economic strength continued to decline in the face of other emerging powers such as the USA and Germany. Unemployment was rife throughout this period, remaining above 10% for over fifteen years.

Generally seen as one of the major factors was structural unemployment, which came about largely through the decline of the older staple industries such as textiles, coal and ship building. These industries experienced a fall in demand as the first world war ended, but it was the fall in exports which had the greatest affect. Due to foreign tariffs and Britain's strong pound, British exports became less attractive to foreign buyers, which damaged the old industries and led to job losses#. This problem was compounded by occupational immobility, the people made redundant in textiles, coal mining, steel and ship building, did not have the skills necessary for the newer industries that were emerging such as automobiles, chemicals and engineering, they found it hard to get new jobs with many becoming unemployed for long periods of time.

Another aspect of structural unemployment, was geographical immobility. The new industries were emerging in the south and east of England, away from the areas of high unemployment in the north and west of Britain. Many people were unwilling or unable to move to find a job. They found it hard to get housing they could afford, and many simply did not want to leave the areas they lived in.

In 1936 John Maynard Keynes published his book "General Theory of Unemployment". This addressed the problem of demand deficient unemployment. He suggested that the reason for long term unemployment was due to companies unwilling to invest,