This Is How the UK Economy Has Changed in the Queen’s 70-Year Reign

Nowhere has Britain’s transformation been more apparent than in the housing market. The average house price has jumped from less than £2,000 -- the equivalent of around £60,000 today -- to a record £270,000

A tourist shop sells Royal souvenirs ahead of the Queen's Platinum Jubilee celebrations in central London.
By Andrew Atkinson and David Goodman
June 02, 2022 | 02:15 PM

Bloomberg — The UK economy of 2022 is barely recognizable from the one that greeted Queen Elizabeth II 70 years ago.

Butter, bacon and meat were rationed in 1952 as World War II cast a long shadow over an economy that was just a fifth of current size. Money was counted in shillings, men wore ties even on days off and pub goers could enjoy pints of beer for just 6p.

Today, suits and cash are both a far less familiar sight in the British pub, while wine and gin have both become much more popular tipples. Houses that once could be bought on one income now require two.

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But some problems of that era remain familiar. Inflation was at 11.2% when Elizabeth became Queen -- within a whisker of the level economists expect to see later this year.

Following are charts that describe the massive shifts the economy has seen since the coronation in 1952.

Richest Generation  | Britons born in 1952 have incomes that are 6% above the UK averagedfd

The UK as a whole is richer and healthier. The cohort born in 1952 had incomes higher than the average of their fellow citizens throughout their lives, according to the Institute for Fiscal Studies. At age 70, men and women can both expect to live seven years longer than they did seven decades ago.

Growth Since 1952 | The economy is five times bigger but productivity has sloweddfd

The economy meanwhile has had a number of booms and busts. Oil shocks, currency crises, financial crashes along with Britain’s exit from the European Union and the pandemic have bookended periods of rapid growth. The overwhelming trend has been one of expansion.

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Less Industrialized | Manufacturing has seen its share of UK employment fall to 7% from 29%dfd

Much of that increase has been fueled by a boom in services, which have flourished as the manufacturing sector receded. While the “big bang” deregulation of banking made Britain a global financial center, the portion of jobs done in factories has plunged to just 7%, from almost 30% in 1952.

Housing Boom | Real house prices have risen more than fourfold in the past 70 yearsdfd

Nowhere has Britain’s transformation been more apparent than in the housing market. The average house price has jumped from less than £2,000 -- the equivalent of around £60,000 today -- to a record £270,000, according to Nationwide Building Society.

It means housing has vastly outpaced inflation and earnings growth, and in some years generated more wealth for homeowners than they gained from employment. Those increases have strained the finances of people buying property. Many families require two incomes now to get on the housing ladder, whereas in 1952 it was mainly the salary of men that provided.

Stretched Affordability | A home now costs  7 times the average wage, and more in Londondfd

Homeownership surged in the second half of the last century. The shift accelerated under Margaret Thatcher, who promoted her vision of a “property-owning democracy” by encouraging council tenants to purchase their homes in the 1980s.

However, the trend has gone into reverse in the past 20 years because of the sharp increase in house prices.

Renting Again | Homeownership is in retreat as buying becomes increasingly unaffordabledfd

The boom in house prices over the past decade was supercharged by record-low interest rates. Since it was founded in 1694, the Bank of England’s benchmark lending rate never strayed below 2% until 2009.

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Inflation and Rates | Inflation is at a 40-year high, interest rates are still close to historic lowsdfd

Then the financial crisis hit, followed by a period of sluggish growth and the coronavirus pandemic. The BOE responded by pushing rates close to zero and buying bonds to depress market rates. Now that inflation has reached a 40-year high, that era is screaming to a halt.

Across the 70 years, inflation has averaged just shy of 5%, leaving prices almost 24 times higher in total across the period.

Smaller Trade Role | The UK has declined in importance as a global trader of goodsdfd

The UK is no longer the trading force it was. In 1960, it accounted for almost 9% of world merchandise exports. Now its share is little more than 2%.

The decline came as manufacturing shifted to lower-cost economies such as China. A further period of weakness followed Brexit, with exports recovering from the pandemic less strongly than in neighboring countries.