Britain’s economy in 1952 was reflected in the equity market by the FT 30 index of leading stocks. As the Queen took the throne, the index had been through a recent dramatic change. The leading steel producers and coal miners were nationalised by the post-war Labour government, removing these important businesses from equity markets and what was the UK blue-chip index.
These businesses had provided many of the sinews of defence for the nation during the war years. Coal was still the main form of domestic heating and powered many factories. The index that emerged was dominated by industrial groups in textiles, chemicals, engineering and construction materials, as well as drink and cigarette manufactures. There were also representatives of the two extreme ends of the retail market in the form of Woolworths and Harrods.
The rise of everyday commodities
In sharp contrast to today, Britain’s premier stock market index contained no oil companies and no banks. Clearly, the technology sector as we know it today did not exist. Some of the big-name companies of that era have managed to survive, often acquired by others so are now members of a larger group. Names such as Dunlop Rubber, London Brick, Associated Portland Cement, Hawker Siddeley, Rolls Royce and Vickers remain important operators today in their respective fields.
Over the last seventy years we have seen the dominant textile industry of 1952 shrink.
If we compare the 1952 index with the top 30 companies in the modern FTSE 100, which was established in January 1984, there are some clear differences which reflect our changing world. In have come two enormous oil companies – and four very large banks. These sectors have seen huge growth in the last seventy years. Tesco and Next have captured more consumer hearts to earn their place. Large pharmaceutical companies have arrived in the index. Three large global mining groups are now listed in the top 30 FTSE 100 constituents.
Fierce global competition
Over the last seventy years we have seen the dominant textile industry of 1952 shrink, hit by cheaper foreign competition. We have seen the rise and fall of GEC as a large electrical engineering group, and the decline of Imperial Chemical Industries after spinning off its successful drug division. Woolworths hit hard times and disappeared from the high street at the start of the global financial crisis in 2009. Harrods was taken private.
The world is a much richer place than it was 70 years ago. Most people now have cars and fridges – items that only the rich could afford in 1952. The world was still waiting for affordable washing machines and central heating. Today, we are likely to have a mobile phone, a tablet or laptop, giving every one of us more computing and processing power for our personal use than the largest businesses enjoyed in the 1950s as offices slowly progressed towards more automation.
Index compiler FTSE Russell reshuffles the FTSE 100 every three months to take account of changes in valuation. The latest changes will be announced on Wednesday. There may be significant FTSE changes with relegation candidates including ITV and Royal Mail, with Johnson Matthey’s move back into the blue-chip index potentially scuppered by the promotion of Centrica.
The Commonwealth of Nations, much beloved by the Queen, is a result of this outward-looking attitude.
Of course, the index is also much more globally focused today than it was in 1952. This is apt. As a seafaring nation we have always looked to trade with nations all over the world. The Commonwealth of Nations, much beloved by the Queen, is a result of this outward-looking attitude. So is Britain’s stock market. The breadth of knowledge contained in The City, deep pools of capital and a trust in our governance and property rights make Britain attractive as a place for companies to place their headquarters, operate and raise money. There has been significant changes in Britain over the last 70 years, but many things also remain the same.
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