New Varieties of Capitalism
Chapter 4: The United Kingdom - still the liberal model?
The British economy has been firmly placed in the liberal paradigm of the Varieties of Capitalism (VoC) approach since Prime Minister Margaret Thatcher had introduced fundamental reforms in the late 1970s. In the decade between 1979 and 1989 the British model underwent a radical transformation from its traditional post-war approach, which was characterised by Keynesian economic policies with high levels of taxation and public spending combined with a significant political influence for the trade unions. The history of Britain's relationship with the post-war project of institutionalised European integration has been a troubled one right from the start. By the 1960s it became obvious that the British model had fallen substantially behind many of its continental partners (particularly Germany) which were benefiting from the trading opportunities opened by the creation of the Common European Market in 1957. While the continent was booming, Britain moved through repeated cycles of boom and bust and generally struggled with sluggish growth and high levels of unemployment. Britain had pursued an alternative route to membership of the European Economic Community (EEC), which it considered to be far too much of a political club, by creating the European Free Trade Association (EFTA) in 1960 with Austria, Denmark, Norway and Switzerland.
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