Written by Gareth Seward
With the recent Platinum Jubilee, no doubt there has been much you have seen written or heard spoken about pertaining to the pros and cons of the monarchy, the debates about the costs versus the benefits, the morality of democracy and so forth. So here, I will instead offer an alternative approach and take a look at the UK economy during the time the Queen was crowned head monarch in comparison to the present day.
When we saw the coronation of Queen Elizabeth II in 1952, we had the third largest economy in the world behind the USA and the USSR. Today we sit in fifth place, following the USA, China, Japan and Germany. Our national debt was high, approximately 170 per cent of GDP, having accrued debts of close to £25 billion following the Second World War. As of 2022, our “official” national debt stands at £2.3 trillion, roughly 95 percent of GDP, though is likely much higher in reality. Of course, the debt to GDP ratio whilst still extremely high, flatters to deceive. It may seem lower now than it was in 1952, but that is because our economy is now more than five times larger.
This also masks the increase in government spending. In 1952 it was forty-one per cent of GDP, whereas today it is forty-three per cent. It may seem only a marginal increase, but again it is over a base ratio more than five times greater than when Her Maj first ascended the throne. Inflation was also over ten per cent, a figure we would have exceeded in the present day had we still used the same methods of measurement, however today’s CPI inflation is already at nine per cent and still pushing upwards.
The UK was also lending military support to the United Nations in the Korean War, a war that was partially blamed for the cost-of-living increase people were feeling at the time. Today we are seeing the ridiculous over-simplification of a similar squeeze being attributed to the Ukrainian-Russia conflict. Whilst that particular situation may be contributing to certain price hikes, that is a market force – supply issues – driving up prices, not inflation as it is so often and incorrectly attributed to. We seem to live in a time where we have forgotten that there are still factors that can affect prices other than inflation (inflation being the weakening of a currency’s purchasing power due to inflating its supply).
One of the hot topics during the current economic climate is those good old house prices. How do today’s prices compare to when the Queen first took the throne in 1952? Back then the average house price was £1,891. Today, the average price is £260,771. The equivalent of the 1952 average would be £39,065 in today’s money, so even adjusting for inflation house prices were still only fifteen per cent of what they currently are today! So why is housing that one commodity market in which price increases have far exceeded wage increases? State intervention and interference in the economy. Artificial demand has been created through suppressed interest rates making mortgages cheap, whilst ever increasing legislation, regulations, bureaucracy, red tape, and planning laws have inhibited supply, thus sending prices rocketing.
So in this year of the Platinum Jubilee, it may seem economically we are (relatively) in a fairly similar place to where we were seventy years ago – on paper at least. However, in reality I just think our establishment has become more efficient at bamboozling the general public with smoke and mirrors to cover their inefficiencies.