After the First World War Britain suffered economically. This was due to its material export sales being reduced as trade was severely disrupted in the war years encouraging customers to shop elsewhere for their goods such as Japan and other countries who took advantage of Britain’s uncertainty and added taxes to their imports. Britain was also in debt by one million pounds owed to other countries, which did not help the situation.
The first major slump began around 1921 when over two million people were unemployed this was partly due to many men being injured in the war over one and a half million men from the United Kingdom alone were permanently weakened by wounds or the effects of gas. Also Britain saw a large reduction in their traditional exports such as coal, iron or steel which resulted in many jobs being forfeited.
The coal industry was being left behind by oil, electricity and gas, these could be obtained cheaper or even for free from other countries like Poland where labour was cheaper and Germany who were still in debt for the reparations of the First World War. Suprisingly though Britain recovered quicker and more so than many of the other countries such as America, France and Belgium, it is argued that this was powered by residential construction and the newer developing industries against rearmament for the Second World War.
In the depressed areas of Britain Scotland, Lancashire Northern Ireland and South Wales unemployment and poverty were common and part of everyday life. Most of these areas were working class where its inhabitants will have been employed in the dwindling industries such as shipping and textiles and at that time there was no alternative work available. The government tried various ways to try and raise funds, they decided to reduce the wages paid to the few people who were still working to provide more funds to support the unemployed unfortunately this only succeeded to depress people further and encourage strikes.
The government even tried to cut their own expenditure this would have involved a reduction in the pay of teachers and funding to schools and hospitals. They also returned to gold standard in April 1925 this made exports expensive but did make imports cheaper. They then raised income tax and reduced unemployment benefits by ten percent; the bank rates were also reduced to a low two- percent lowering the interest earned on money saved.
Two unpaid commissioners were taken on to try and revive the worst hit areas this was said to have little or no effect. The government then set out to encourage new businesses by offering reduced rates, rent and income tax, this was effective but only in providing lightweight factory work mainly directed at women to produce the all new electrical goods such as parts for irons, radios and light bulbs.
This meant that people had more extra cash to spend on consumer goods and more people were able to go on holiday for the first time or even buy their own home, this was encouraged by the falling cost of construction materials and cheaper borrowing as the interest rates dropped. This triggered a wave of house building to meet the increased demand, which in turn created many manual male orientated jobs and also increased the demand for household goods such as furniture and telephones.