1.2 Economic developments, 1951-64 Flashcards
What did Harold Macmillan say in 1957?
‘most of our people have never had it so good’
In what way was the Conservative government lucky in its timing?
came to power just as beginnings of post-war economic recovery began to show (general pattern of ’50s - continued economic development)
When did food rationing come to an end?
July 1954
GB Population 1961 vs 1951
1961 - 51 million (5%/ 2 million more than in 1951)
By 1955, what was it estimated? What figure backed this up?
that full unemployment had been achieved - with only 200,000 unemployed (less than 1% of workforce)
What industries decreased in terms of numbers employed?
traditional occupations - agriculture, fishing, coal mining, shipbuilding
What industries increased in terms of numbers employed?
electrical and engineering industries + those relating to cars, steel, other metals
By 1960, how many people were employed in service industries
Nearly 5 million people - 1 in 10 of the population (roughly the same as those in heavy industries)
In the run up to 1955 election, what did the ‘give-away budget’ do? who was chancellor?
Rab Butler - provided middle classes with £134 million in tax cuts
What percentage more goods could Britain import for the same number of exports in the later 1950s, compared to 1951?
improvement in terms of world trade - could import 29% more goods
Britain’s ranking in terms of income per head
higher income per head than any other major country, apart from US (however growth rates did not also exceed elsewhere)
What did the growth of wages, which outstripped the rate of increase in production, mean?
inflation
How did the Conservative government try to both maintain growth and employment, as well as keep prices steady?
- appeals to industry and public - persuade TUs against high wage increases
- ‘stop-go’ economics
Why did the government keep taxes high? (2 reasons)
- to control excessive spending - that would lead to unwanted increase in imports
- to pay for rising costs of public services
Stop side of ‘stop-go’ economic cycle
Imports exceed exports + balance of payments crisis
-> Government controls: high interest rates and wage freezes
-> Demand falls
-> Output decreases
Go side of ‘stop-go’ economic cycle
Output decreases
-> Controls removed
-> Increase in demand
-> Rising imports
-> Imports exceed exports + balance of payments crisis
What caused a run on the pound in 1956?
pressure from US over Suez Crisis - exposed Britain’s financial weakness
what is a run on the pound
rapid fall of the value of the pound in international currency markets
Who believed in a policy that would be later be termed ‘monetarism’ after the run on the pound?
Peter Thorneycroft, Macmillan’s Chancellor
Why were one-nation cabinet ministers like Iain McLeod opposed to Peter Thorneycroft’s suggested monetarist policy?
would lead to increased unemployment and cutbacks in housing
What economic side did Macmillan side with?
Macmillan sided with those who wanted to keep up an expansionist economic policy. Thorneycroft resigned in 1958
Did the financial crisis in 1956 do lasting harm to the popularity of the Conservatives?
No - Situation improved drastically by 1959. Sterling regained its value against dollar
The economy expanded so much that the budget of … provided tax cuts of…
Budget of April 1959 provided tax cuts of £370 million - even more than the Butler give-away budget of 1955
When was Macmillan re-elected?
October 1959
What is generally accepted as key factor in Macmillan’s comfortable re-election? when?
October 1959 - general consumer affluence reflected in budget of April 1959 (tax cuts of £370m)
In what period was the British economy at its peal?
between 1960 and 1964
What did the government do in 1961 amongst fears of economy overheating?
introduced a ‘pay pause’ to hold down wage inflation
asked for loan from the IMF
Why did Macmillan apply to join the EEC?
economic growth in Europe, esp. West Germany was leaving Britain behind.
Empire + Commonwealth not sufficient
When was the rejection of Britain’s application to join the EEC?
January 1963
When was the Beeching Report published? What was it a review into?
autumn 1963 - a review into cutting public expenditure
What were the recommendations of the Beeching Report?
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
Effects of the railway network cuts recommended by the Beeching Report
- public outrage
- fundamental social change
- leaving many rural areas more isolated
What phase was the economy pushed into, by Chancellor Reginald Maulding in 1963? How?
‘Go’ phase - lowering bank rate to encourage consumer spending
How did Britain’s growth rate increase from 1963 to 1964?
4% in 1963 to nearly nearly 6% in 1964
By what percentage did exports rise between 1961 and 1964? How much higher were imports through this period?
just over 10% - but imports remained nearly 20% higher
