Structural adjustment in the UK economy : the role of North Sea oil and tight money, and the implications for economic policy
In recent years major structural changes have been taking place within the UK economy. One of the major factors responsible for this is the oil developments in the North Sea, which have seen since 1980 the achievement of self sufficiency in oil for the UK. At the same time as this Development has been taking place, there has been a major change in economic policy towards the control of inflation through monetary and fiscal restraint as outlined in the Medium Term Financial Strategy. Economic policy was now to be framed within a medium term context, rather than in the context of short term stabilisation. Demand management policies were to be downgraded, and more emphasis was to be placed upon improving the supply side of the economy. This thesis is directed towards analysing the above developments but in particular the effects of an oil discovery, oil price increases and tight money upon the structure of the economy as well as the dynamic processes of adjustment involved. The evolution and final outcome of the adjustment process obviously also depends crucially upon the policies adopted by the Government, in terms of its attitude towards such developments. Hence our analysis would be incomplete without a discussion of present Governmental attitudes as well as its appropriateness. This ultimately involves deciding whether market forces should determine the reallocation of resources, or whether greater involvement by the Government is required.