2 Economic Developments Flashcards
what 2 ways was there a post war boom?
- prosperity and affluence
2. through Rab Butler
Name 5 reasons for problems in the economy?
- Stop-go economics
- Giveaway budgets
- 1957 and 1961 financial crisis
- Macmillan’s attitude towards the economy
- 1961 EEC application
Post war boom: name 3 main facts about prosperity and affluence
- 7 million homes built by 65
- Unemployment averages at 2%
- Real wages increased
Post war boom: name 3 main facts about Rab Butler
Continues to maintain employment rate and growth
Expanded the welfare state
Committed to defence spending on nuclear weapons
Problems in the economy:name 2 main facts about giveaway budgets
1955: butler gave middle class £134 million in tax cuts
1959: £370 million tax cut before election
Problems in the economy: name 2 main facts about the financial crisis
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
Problems in the economy: name 2 main facts about Macmillan’s attitude towards the economy and employment
Did not try to fix sluggish growth and continued Kensigism policies
Unemployment was 800,000 by 63
Problems in the economy: name 3 purposes of the 1961 EEC application
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
How much did the economy grow from 1951-1964 compared to W Germany?
Britain: 40%
W Germany: 250%
What is NEDC?
National Economic Development Council
Attempt to get Economic cooperation in government
What is inflation?
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.
What is deflation?
A fall in price of goods and services
inflation can be controlled through ‘freezing’ wage rises, increasing taxation and making borrowing harder.
When did food rationing end?
July 1954
What happens to the population by 1961? Why?
By 1961, 51 million people. 5% more than 51.
Due to increase in birth rate
What was unemployment at in 1955?
215,000
What happens to traditional occupations vs new occupations?
New employment increased, traditional employment decreased
How many people were employed in services?
Nearly 5 million by 1960, 1/5 of population
Industrial production vs W Germany’s
1952
B: 101
WG: 126
1959
B: 129
WG: 225
World trade vs W Germany’s
1950
B: 25%
WG: 7%
1959
B: 17%
WG: 19%
Balance of trade in Britain
1951-1955: -19
1956-1960: +132
What caused inflation?
The growth in wages was outstripping the rate of increase in production
What did I the govt do to try and reduce inflation, relating to trade unions?
Tried to convince them to stop asking for high wage increases
What are the 7 stages in the stop go cycle?
- Imports exceed exports
- Government controls: increases interest rates and there is a wage freeze
- Demand falls
- Output decreases
- Controls removed
- Increase in demand
- Rising imports
Back to start
Economic implications of the suez crisis
Pressure from USA exposed Britain’s financial weakness and started a run on the pound
