When the UK entered the European Economic Community on 1 January 1973, most Britons didn’t notice. The front-page headline in The Guardian summed up the national mood: "We’re in – but without the fireworks." Reporters David McKie and Dennis Barker wrote: "It was difficult to tell that anything of importance had occurred and a date, which will be entered in the history books as long as histories of Britain are written, was taken by most people as a matter of course."
One reason why it was all so low key was that the UK had joined the EEC without a referendum. Prime minister Edward Heath, most of his ministers and nearly every large company in Britain thought joining was the right thing to do. The decision would be endorsed retrospectively by British voters in 1975 in a one-sided referendum. The Yes campaign won two-thirds of the vote after raising more than £1m in donations (ICI and Shell were particularly generous) compared with £9,000 for No.
Yet in 1973, Britons didn’t seem to know what to make of the EEC. A BBC poll found that 38 per cent were happy to join this new and improved free-trade area, 39 per cent were unhappy and 23 per cent didn’t know or didn’t care.
Even the bureaucrats seemed slightly underwhelmed. The official "Fanfare for Europe" was delayed slightly when officials queried whether the planned exhibition of the Bayeux Tapestry, commemorating one of France’s greatest away wins over the English, was the best way to mark this new epoch. The eventual Fanfare was muted. The Guardian noted: "Among other attractions, an Irish folk group will perform in the precincts of Lincoln’s Inn and Lord Montagu’s motor cars will go to Brussels."
A Brexiteer before the UK had even entered Europe, the playwright and critic Kenneth Tynan noted in his diary: "The Tory attitude: the EEC is a challenge for British industry. There will be unemployment and higher prices and small businesses will go to the wall, but all this is presented as if it were somehow an inevitable, character-building ordeal, like the prospect of execution that concentrated the mind of the Major in Pepys so wonderfully. The English people really think there is some miraculous panacea in the Common Market."
Heath is often portrayed as a fanatical Europhile but he was also, his biographer John Campbell observed, a "little Englander" who wanted the UK to lead and guide the EEC in a way it could never lead or guide America. That ambition never came to pass but his passion reflected a genuine belief that the UK, having lost an empire, needed to find a role.
British business certainly needed reforming. The collapse and government rescue of Rolls-Royce in 1971 had already proved that. None of the UK’s largest companies in 1973 – Dunlop Rubber, ICI, EMI, GEC, Turner & Newall and BOC – still exist today as independent businesses. The economy had begun setting all the wrong kind of records: in 1972, 23.9 million days were lost to strike action and, in 1973, the trade deficit plummeted to -£1.7bn.
After a mass resignation of non-executive directors at Lonhro in May 1973, Heath labelled the mining conglomerate’s boss Tiny Rowland "the unpleasant and unacceptable face of capitalism". For a Conservative prime minister in the early 1970s, that was strong stuff.
Although The Economist proclaimed in September 1973 that "Britain is two-thirds of the way towards an economic miracle", Heath had become frustrated by bankers’ failure to finance the economic transformation his government sought. Yet as Paul Bazalgette, senior partner at stockbroker Phillips & Drew, noted in the company journal, their reluctance was not unique: "They [German bankers] do not actually retch at the mention of such things as the British economy, sterling or labour relations, but the disfavour on their chiselled faces is plain for all to see."
The City did some things to put its house in order – women were finally admitted to the London Stock Exchange on 26 March – but Labour leader Harold Wilson told his shadow cabinet that the stock market was an "amateurish casino and should be an investment market" and proposed that banks and insurance companies be nationalised. Former chancellor (and future prime minister) James Callaghan demurred, saying, "We are aiming at the wrong targets. The City may be immoral but you can’t control the banks."
Many industrialists were contemptuous of the City’s insider dealing ("a practice that was widely believed, with some reason, to be endemic" according to historian David Kynaston), incompetence and conflicts of interest. The shocking collapse of Mitchell Construction in January 1973 was a case in point.
A fundamentally sound business, the group was imperilled by false geological reports on a power station in Zambia. This crisis was exacerbated, chairman David Morrell later alleged, because the company’s merchant bank Samuel Montagu was too focused on the upcoming flotation of Mitchell’s largest domestic rival, McAlpine, to help and its accountant Cooper Brothers was also playing an advisory role for the project’s engineers. The City’s definition of conflict-of-interest would, Morrell noted acidly, "remain an impenetrable mystery".
Many young people were contemptuous of British business, with one undergraduate telling Management Today in April 1973: "Just look at the mess industry is in. Redundancies, economic crisis ... lots of companies are in serious trouble. The only intelligent response is to keep out of it."
Some critics made a different case against industry and the City. Edward Goldsmith, elder brother of financier Sir James Goldsmith, devoted an entire issue of his magazine The Ecologist to a green manifesto called "A Blueprint for Survival". Although this inspired the precursor to the UK’s Green Party, it was less influential in 1973 than Small is Beautiful, EF Schumacher’s best-selling critique of the modern economy.
Until the autumn of 1973, most Britons seemed resigned, with varying degrees of cheerfulness, to muddling through. The best-selling album was Elton John’s Don’t Shoot Me I’m Only the Piano Player. The biggest draw at the box office was Roger Moore’s first outing as James Bond in Live and Let Die. The most watched TV programme of the year, BBC1’s coverage of the wedding of Princess Anne and Captain Mark Philips on 14 November, drew 27.6 million viewers. The country’s best-selling new car was the Ford Cortina, made in Dagenham.
True, there were many causes for concern – not least an IRA bombing campaign on the British mainland. A rail strike in March prompted the famous Evening Standard headline "ABSOLUTE CHAOS TONIGHT – OFFICIAL". The following month, value added tax was introduced at a standard rate of 10 per cent and a new phase of Heath’s doomed attempt to control prices and incomes kicked in.
As some companies were dying, others were being born. Virgin released its first album, Mike Oldfield’s Tubular Bells. In only its fifth year of trading, Amstrad broke the £1m sales barrier. Rupert Murdoch, owner of The Sun and News of the World, acquired his first US newspapers. Rolls-Royce’s luxury car marque was demerged from the state-owned jet-engine business. The vicissitudes of one of British industry’s most famous names left Management Today’s then editor Bob Heller fuming: "The first and last thing to be said about Rolls-Royce is that there are no excuses. The mistakes which killed it were common or garden errors of management."
New technology was being born, too. In April, Management Today greeted the advent of the fax machine by asking: "Are the steps of the postman numbered? Management, which to a large extent depends on the exchange of documents, will certainly benefit from a better, more modern method of transmitting paperwork." That same month, a truly game-changing technology took a giant leap forward when American engineer Marvin Cooper of Motorola made the first call on a handheld mobile phone in New York.
For millions of Britons, October was the cruellest month. When the Yom Kippur war broke out, Opec slapped an embargo on oil exports to countries including the UK, which were deemed to be supporting Israel. While that shock was working its way through the system, millions of football fans reacted with incredulity and anger when the England football team, which had won the World Cup seven years earlier, failed to reach the finals for the first time.
Guardian economics editor Larry Elliott is not alone in highlighting that defeat – actually a frustrating 1-1 draw with Poland at Wembley in a match England needed to win – as marking the end of the UK’s post-war abundance. For millions of Britons, the outcome symbolised the country’s abrupt loss of influence – and indeed, basic competence, given that England claimed to have invented the modern game. (What made the defeat even more bitter was the fact that Scotland had reached the finals for the first time since 1958.)
The end of the post-war golden age, Elliott argues, led inevitably to a "wholly different way of looking at the world. Margaret Thatcher in Britain and Ronald Reagan in America believed in market forces, financial deregulation, lower taxes, weak trade unions and less intrusive government." That might seem a lot to hang on one game of football but the middle-of- the-road political consensus known as Butskellism (after the Tory minister Rab Butler and Labour leader Hugh Gaitskell) was already disintegrating by 1973, a process completed when Thatcher replaced Heath as Tory leader two years later.
As 1973 drew to a close, Heath introduced the Three-Day Week to conserve disrupted supplies of oil and coal. This damage-limitation exercise fuelled – pun intended – fears of an imminent social, economic and political apocalypse. On 12 December, historian James Lees-Milne noted in his diary: "influential City friends had warned Sachie [writer Sir Sacheverell Sitwell] that ‘we’ only had three months to clear out of England. Another told him to hoard his cartridges for there would be shooting within that time."
Luckily, Britons turned to ballots not bullets in 1974 in two inconclusive general elections, which suggested voters trusted neither Heath nor Wilson. It was impossible to blame British leaders, in politics or business, for the economic crisis triggered by the Yom Kippur war – although Heath had privately predicted a surge in oil prices months before the conflict – but it was fair to question their competence.
Certainly, British business was culpable. Within its own lucrative domain, the City was too willing to take risks, confident that the government would conclude the banks were collectively too big to fail. They were soon (and not for the last time) proved right: the Bank of England lost £1.1bn in today’s money, bailing out 60 smaller banks in a crisis, caused by a slump in property prices, that broke in December 1973.
In British industry, risk was largely considered something to be avoided, not embraced. As chairman of GEC, Lord Arnold Weinstock was an artful strategist, skilled builder of companies and a ruthless cost cutter. Yet Weinstock’s insistence that he would never invest in anything that didn’t offer him a better return than cash in the bank meant the group never commercially exploited the technologies – particularly silicon chips and cellular phones – it was at the forefront of developing. UK plc’s loss would prove America Inc’s gain.
Weinstock wasn’t the only British business leader to possess this blind spot. Many economic experts, notably Michael Kitson and Jonathan Michie, argue that the so-called golden age of British manufacturing – roughly spanning 1950 to 1973 – was tarnished by chronic underinvestment. British workers had, they conclude, neither the quantity nor quality of equipment used by their counterparts in France and Germany. In Kitson and Michie’s view, British manufacturing had actually been in decline since 1960, a deterioration that became glaringly obvious by the early 1970s and was aggravated by abysmal industrial relations.
Elliott is right to suggest that, after 1973, the UK would never be the same. Yet many of the challenges facing the country today feel eerily similar. Will leaving the European Union prove to be any more of a tonic for British business than entering the EEC? Is the financial sector too large for the good of the economy? Heath and Wilson both felt so in 1973 yet few prime ministers have dared to say so since. And what environmental price are we prepared to pay for economic growth?
So what happened to those corporate colossi? Dunlop was the first to go, acquired (and broken up) in 1985 by BTR, which itself merged with Siebe in 1999 and now trades as Invensys. In 2001, Turner & Newall went into administration after its US owner Federal-Mogul filed for Chapter 11 to protect itself from asbestos claims. In 2005, GEC, renamed Marconi, was broken up after missing out on a huge government technology deal. One year later, BOC was acquired by Germany’s Linde Group (which had been trying to buy it for decades). The last to fall was ICI which, having sold many profitable businesses to reduce debt, was acquired by AkzoNobel in 2008.
ICI’s demise was symbolic because in its 1980s heyday it had been run by Sir John Harvey-Jones. In his subsequent TV career as a business troubleshooter, Harvey-Jones became the most famous British industrialist since Isambard Kingdom Brunel. He died at the age of 83 on 9 January 2008, one week after AkzoNobel completed its takeover of his old company.
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