1.2 Economic developments, 1951-64

Question 1

What did Harold Macmillan say in 1957?

Answer 1

‘most of our people have never had it so good’

Question 2

In what way was the Conservative government lucky in its timing?

Answer 2

came to power just as beginnings of post-war economic recovery began to show (general pattern of ’50s - continued economic development)

Question 3

When did food rationing come to an end?

Answer 3

July 1954

Question 4

GB Population 1961 vs 1951

Answer 4

1961 - 51 million (5%/ 2 million more than in 1951)

Question 4

By 1955, what was it estimated? What figure backed this up?

Answer 4

that full unemployment had been achieved - with only 200,000 unemployed (less than 1% of workforce)

Question 5

What industries decreased in terms of numbers employed?

Answer 5

traditional occupations - agriculture, fishing, coal mining, shipbuilding

Question 6

What industries increased in terms of numbers employed?

Answer 6

electrical and engineering industries + those relating to cars, steel, other metals

Question 7

By 1960, how many people were employed in service industries

Answer 7

Nearly 5 million people - 1 in 10 of the population (roughly the same as those in heavy industries)

Question 8

In the run up to 1955 election, what did the ‘give-away budget’ do? who was chancellor?

Answer 8

Rab Butler - provided middle classes with £134 million in tax cuts

Question 9

What percentage more goods could Britain import for the same number of exports in the later 1950s, compared to 1951?

Answer 9

improvement in terms of world trade - could import 29% more goods

Question 10

Britain’s ranking in terms of income per head

Answer 10

higher income per head than any other major country, apart from US (however growth rates did not also exceed elsewhere)

Question 11

What did the growth of wages, which outstripped the rate of increase in production, mean?

Answer 11

inflation

Question 12

How did the Conservative government try to both maintain growth and employment, as well as keep prices steady?

Answer 12

• appeals to industry and public - persuade TUs against high wage increases
• ‘stop-go’ economics

Question 13

Why did the government keep taxes high? (2 reasons)

Answer 13

• to control excessive spending - that would lead to unwanted increase in imports
• to pay for rising costs of public services

Question 14

Stop side of ‘stop-go’ economic cycle

Answer 14

Imports exceed exports + balance of payments crisis
-> Government controls: high interest rates and wage freezes
-> Demand falls
-> Output decreases

Question 15

Go side of ‘stop-go’ economic cycle

Answer 15

Output decreases
-> Controls removed
-> Increase in demand
-> Rising imports
-> Imports exceed exports + balance of payments crisis

Question 16

What caused a run on the pound in 1956?

Answer 16

pressure from US over Suez Crisis - exposed Britain’s financial weakness

Question 17

what is a run on the pound

Answer 17

rapid fall of the value of the pound in international currency markets

Question 18

Who believed in a policy that would be later be termed ‘monetarism’ after the run on the pound?

Answer 18

Peter Thorneycroft, Macmillan’s Chancellor

Question 19

Why were one-nation cabinet ministers like Iain McLeod opposed to Peter Thorneycroft’s suggested monetarist policy?

Answer 19

would lead to increased unemployment and cutbacks in housing

Question 20

What economic side did Macmillan side with?

Answer 20

Macmillan sided with those who wanted to keep up an expansionist economic policy. Thorneycroft resigned in 1958

Question 21

Did the financial crisis in 1956 do lasting harm to the popularity of the Conservatives?

Answer 21

No - Situation improved drastically by 1959. Sterling regained its value against dollar

Question 22

The economy expanded so much that the budget of … provided tax cuts of…

Answer 22

Budget of April 1959 provided tax cuts of £370 million - even more than the Butler give-away budget of 1955

Question 23

When was Macmillan re-elected?

Answer 23

October 1959

Question 24

What is generally accepted as key factor in Macmillan’s comfortable re-election? when?

Answer 24

October 1959 - general consumer affluence reflected in budget of April 1959 (tax cuts of £370m)

Question 25

In what period was the British economy at its peal?

Answer 25

between 1960 and 1964

Question 26

What did the government do in 1961 amongst fears of economy overheating?

Answer 26

introduced a ‘pay pause’ to hold down wage inflation
asked for loan from the IMF

Question 26

Why did Macmillan apply to join the EEC?

Answer 26

economic growth in Europe, esp. West Germany was leaving Britain behind.
Empire + Commonwealth not sufficient

Question 27

When was the rejection of Britain’s application to join the EEC?

Answer 27

January 1963

Question 28

When was the Beeching Report published? What was it a review into?

Answer 28

autumn 1963 - a review into cutting public expenditure

Question 29

What were the recommendations of the Beeching Report?

Answer 29

massive cuts in Britain’s rail network - incl. the closure of more than 30% of the rail network –> hundreds of branch lines, thousands of stations axed

Question 30

Effects of the railway network cuts recommended by the Beeching Report

Answer 30

• public outrage
• fundamental social change
• leaving many rural areas more isolated

Question 31

What phase was the economy pushed into, by Chancellor Reginald Maulding in 1963? How?

Answer 31

‘Go’ phase - lowering bank rate to encourage consumer spending

Question 32

How did Britain’s growth rate increase from 1963 to 1964?

Answer 32

4% in 1963 to nearly nearly 6% in 1964

Question 33

By what percentage did exports rise between 1961 and 1964? How much higher were imports through this period?

Answer 33

just over 10% - but imports remained nearly 20% higher