2 Economic Developments

Question 1

what 2 ways was there a post war boom?

Answer 1

1. prosperity and affluence

2. through Rab Butler

Question 2

Name 5 reasons for problems in the economy?

Answer 2

1. Stop-go economics
2. Giveaway budgets
3. 1957 and 1961 financial crisis
4. Macmillan’s attitude towards the economy
5. 1961 EEC application

Question 3

Post war boom: name 3 main facts about prosperity and affluence

Answer 3

1. 7 million homes built by 65
2. Unemployment averages at 2%
3. Real wages increased

Question 4

Post war boom: name 3 main facts about Rab Butler

Answer 4

Continues to maintain employment rate and growth

Expanded the welfare state

Committed to defence spending on nuclear weapons

Question 5

Problems in the economy:name 2 main facts about giveaway budgets

Answer 5

1955: butler gave middle class £134 million in tax cuts
1959: £370 million tax cut before election

Question 6

Problems in the economy: name 2 main facts about the financial crisis

Answer 6

1957, Suez had swollen debts to £564 million. Inflation was high and there was a run on the pound

1961, overheating economy forces pay ports to hold down wage inflation. NEDC was introduced, but caused the night of the Long Knives

Question 7

Problems in the economy: name 2 main facts about Macmillan’s attitude towards the economy and employment

Answer 7

Did not try to fix sluggish growth and continued Kensigism policies

Unemployment was 800,000 by 63

Question 8

Problems in the economy: name 3 purposes of the 1961 EEC application

Answer 8

Meant to be used industrial production for large-scale market

Meant to increase productivity and boost competition

Meant to stimulate growth by encouraging EEC expansion

Question 9

How much did the economy grow from 1951-1964 compared to W Germany?

Answer 9

Britain: 40%

W Germany: 250%

Question 10

What is NEDC?

Answer 10

National Economic Development Council

Attempt to get Economic cooperation in government

Question 11

What is inflation?

Answer 11

It is the increase in the price of products which occurs when people have more money to spend than there are goods available.

Can encourage manufacturers to expand

Can overheat economy as workers demand higher wages.

Question 12

What is deflation?

Answer 12

A fall in price of goods and services

inflation can be controlled through ‘freezing’ wage rises, increasing taxation and making borrowing harder.

Question 13

When did food rationing end?

Answer 13

July 1954

Question 14

What happens to the population by 1961? Why?

Answer 14

By 1961, 51 million people. 5% more than 51.

Due to increase in birth rate

Question 15

What was unemployment at in 1955?

Answer 15

215,000

Question 16

What happens to traditional occupations vs new occupations?

Answer 16

New employment increased, traditional employment decreased

Question 17

How many people were employed in services?

Answer 17

Nearly 5 million by 1960, 1/5 of population

Question 18

Industrial production vs W Germany’s

Answer 18

1952
B: 101
WG: 126

1959
B: 129
WG: 225

Question 19

World trade vs W Germany’s

Answer 19

1950
B: 25%
WG: 7%

1959
B: 17%
WG: 19%

Question 20

Balance of trade in Britain

Answer 20

1951-1955: -19

1956-1960: +132

Question 21

What caused inflation?

Answer 21

The growth in wages was outstripping the rate of increase in production

Question 22

What did I the govt do to try and reduce inflation, relating to trade unions?

Answer 22

Tried to convince them to stop asking for high wage increases

Question 23

What are the 7 stages in the stop go cycle?

Answer 23

1. Imports exceed exports
2. Government controls: increases interest rates and there is a wage freeze
3. Demand falls
4. Output decreases
5. Controls removed
6. Increase in demand
7. Rising imports
   Back to start

Question 24

Economic implications of the suez crisis

Answer 24

Pressure from USA exposed Britain’s financial weakness and started a run on the pound

Question 25

What is the story behind the financial crisis in 1957’s monetarism idea?

Answer 25

Thorneycrofy, Macmillan’s chancellor, wanted monetarism but cabinet ministers like McLeod strongly opposed it because it would lead to increased unemployment and cutbacks in housing.

Question 26

What is monetarism?

Answer 26

Limiting wage increases and to cut the money supply

Question 27

What were the effects of the 1957 financial crisis?

Answer 27

Did not do lasting damage to the popularity of the Conservative party

Question 28

Why was there a 1959 budget cut?

Answer 28

After the 1957 financial crisis the sterling regained its value against the dollar and the economy expanded.

Question 29

What are contributing factors to Macmillan’s easy re-election in 1959?

Answer 29

1959 give away budget

Expanding economy

Question 30

When was the British economy at its peak?

Answer 30

1960-64

Question 31

When was there a pay pause?

Answer 31

1961

Question 32

What does IMF mean?

Answer 32

International Monetary Fund

Question 33

How was Britain being compared to the worlds economic status?

Answer 33

The trade of other countries have been better compared to Britain. Specifically in West Germany there has been more economic growth.

Question 34

What is the NEDC? When was it created?

Answer 34

Meant to keep an eye on wages and prices. Added in 1962

Question 35

When was Britain rejected from the EEC? Effects?

Answer 35

January 1963, serious set back for Macmillan

Question 36

What was the Beeching Report in 1963?

Answer 36

It recommended massive cuts in Britain’s rail network, including the closure of more than 30% of the rail network, provoking public outrage.

Question 37

What were the effects of the Beeching Report?

Answer 37

Thousands of stations were axed

Cause the fundamental social change, and leaving many rural areas more isolated

Question 38

Export vs import growth between 1961-1964

Answer 38

Exports: rose just over 10%
Imports: nearly 20% higher