Buy British campaigns after 1945: why 'soft' preference didn't work

"There has been a substantial debate on the causes of Britain’s poor economic performance after 1945. Weaknesses in government policy, particularly with respect to supply-side improvements, have featured prominently in explanations for this decline. Broadberry and Crafts, for example, have argued that successive governments in the post-war period accepted a social contract with trade unions to maintain high levels of employment but the adverse consequences of this were that it increased the bargaining power of trade unions, lowered the costs to firms of accepting restrictive practices and generally encouraged high levels of ‘X’ inefficiency, especially over-manning and low effort. A corollary of this was the growth of employment in the public sector, which Thirlwall claimed led to a Balance of Payments constraint: the expansion of the non-market sector was a symptom of the inability of the market sector to grow as fast as productivity growth without the economy coming up against a Balance of Payments Constraint. This constraint operated because Britain’s income elasticity of demand for imports was 1.6 per cent, whereas world income demand for UK exports was 1 per cent. Between 1965-74 for example, industrial productivity in the UK grew at 4%p.a while output increased by only 1.7%. Thirlwall argued that the industrial sector could not have grown at 4% and thereby have retained more of its resources because of the consequences such an expansion would have had on the Balance of Payments. A 4% rate of growth of national output would mean that imports would have increased at 6.4% pa but exports at only 4% This, of course, was not sustainable. In this article we do not intend to revisit these debates. Rather, we examine an aspect of demand management policy which has been largely neglected: ‘Buy British’ campaigns in the mid 1960s and early 1980s. In theory, an aggressive marketing policy by government, extolling the virtues of British-made products, could have alleviated the Balance of Payments constraint. Moreover, such a policy could have prompted a supply-side response from British manufacturers. For example, an advertising campaign which reinforced consumer preferences for British products would have provided some insulation from foreign competition and this would have facilitated investment and innovation. Despite the potential appeal of these benefits we argue that there were a number of major impediments to ‘Buy British’ campaigns. It is useful to divide our analysis into two distinct subperiods: the 1960s, when Britain did not belong to the EU, and the 1980s, when it did. For both periods, British governments were hesitant to endorse a full-scale marketing campaign. Part of the explanation for this was surveys indicated that British consumers at best had only limited preference for domestic manufactures. A further problem was that successive British governments were at best reluctant and at worst hostile to launching a BB campaign. Nonetheless, there were also more mundane reasons for reluctance to become engaged. For example, which non-governmental bodies should be asked to participate? The CBI, for example, did not countenance involvement in the 1960s, but was more collaborative in the 1980s."