After World War II, the UK GDP per capita exceeded that of France and West Germany. The period from the early 1950s to the mid-1970s saw very high economic growth throughout the Western world in particular in the EEC countries. In contrast, United Kingdom lagged behind so that by the early 1970s, its GDP per capita was below those of both France and West Germany. The corporatist models in particular in West Germany, brought high-growth and investment. The freedom to sell within the EU was an undoubted factor.
The near quadrupling of the price of oil after the war Arab Israeli war in 1973, caused an economic shock which ushered in almost a decade of high inflation, high unemployment and lower growth. UK inflation hit 20% and greatly exceeded inflation in Germany in particular, and to a lesser extent, the rest of the EEC.
The UK’s financial position deteriorated significantly under the Labour government of 1974 to 1979. An emergency loan was required from the International Monetary Fund in 1976. Strikes in major industries and in the public sector were an everyday occurrence. Latterly, the Labour government began to take measures to bring stability to the public finances.
The 1975 Referendum
The Labour Party returned to power in the United Kingdom in 1974 following two very narrow elections. The bulk of the Labour Party including party leader and former and future Prime Minister Harold Wilson had voted against joining, although he and the party made the initial application to accede in 1969.
The Labour Party promised it would renegotiate the terms of British entry and consult the people in a referendum once new terms had been agreed. Some minor changes were made to the terms of UK membership including further concessions for New Zealand for agricultural exports to the UK and the new European regional development fund was created to assist for regions
The UK June 1975 referendum was fought largely on the grounds of sovereignty. The left-wing opposition rejected the EEC as a capitalist club. Several members of the Labour government including Tony Benn and Michael Foot campaigned for withdrawal while Harold Wilson and the other members campaigned for continued membership. Apart from these and other prominent Labour figures, the Conservative party the Labour Party and the Liberal party supported a yes vote.
Many of the others supporting a no vote included marginalised figures and parties including Sinn Fein and Republican movement, the Communist Party the National front and the DUP. The UK electorate chose to remain in the EEC by a margin of 2 to 1 on a national turnout of 64%
The Parties EEC Policy
Margaret Thatcher was elected UK Prime Minister in May 1979 on a programme which promised radical reform. She had been elected Conservative party leader in 1975 and had supported remaining in the EEC in the referendum that year. However, her instincts were not pro-EEC.
The Labour Party lurched to the left and elected Michael Foot as leader. A significant block of leading Labour Party members, including the most pro-European, formed a new party the Social Democratic Party later forming an alliance with the Liberal party (ultimately becoming the Liberal Democrats many years later).
The 1983 Labour Party manifesto called for unilateral nuclear disarmament, withdrawal from the EEC higher personal taxation for the rich and renationalisation of recently privatised industries. Mrs Thatcher was re-elected with an increased majority.