1.12 Economic Developments Flashcards
What term was coined to represent the economic policies of Butler and Gaitskell?
The term “Butskellism” was coined by The Economist to symbolize the similarities in their economic strategies.
What challenges did Butler face when he took office?
Butler faced a £700 million balance of payments deficit and high defense costs associated with the Korean War, absorbing 10% of GNP and 30% of total government expenditure.
How did Butler use the bank rate to control the economy?
He increased the bank rate to 4%, aiming to curtail spending and inflation, and reduced it back to 2% after achieving a surplus in 1952.
What significant change occurred in the economy under Butler’s leadership in 1953-54?
Food rationing and most wartime controls were abolished, leading to near full employment, low inflation, and rising prosperity.
Did Butler break away from the post-war consensus regarding nationalized industries?
No, he returned road haulage and the iron and steel industry to private ownership but left other nationalized industries untouched.
What issues arose from Butler’s economic policies as observed by historians like Morgan?
Morgan argued that the economic boom under Butler led to inflationary pressures and raised concerns about the value of the pound.
Who succeeded Butler as Chancellor in December?
Macmillan succeeded Butler as Chancellor in December.
Under Macmillan’s policies, what measures were taken to control the economy?
Macmillan raised the bank rate to 5.5%, cut subsidies on food, reduced public investment, and introduced the Premium Bond Scheme.
What notable changes were witnessed in the income tax rate during Heathcoat-Amory’s tenure?
The standard rate of income tax was reduced from 8s 6d (42.5%) to 7s 9d (38.75%), reaching a new post-war low.
What problems arose again in the economy during Heathcoat-Amory’s term?
The economy faced overheating due to rising wage increases, higher consumer spending, and an imbalance in imports and exports, leading to a massive balance of payments crisis.
What actions did Selwyn Lloyd take to control the economy, and were they successful?
Lloyd raised the bank rate to 7%, attempted wage and price restraints through NEDC and NIC, and introduced the Pay-Pause, which ultimately failed to curb inflation and faced opposition from the TUC.
How did Maudling attempt to stimulate the economy, and what were the consequences?
Maudling introduced tax cuts and low bank rates, leading to increased growth and consumer spending but resulted in a surge in imports, a significant government deficit, and high unemployment.
