24 - Thatcher's Economic Policies And Their Impacts Flashcards
What ideology influenced Thatcher’s economic policies?
The New Right
Which Chicago economist is monetarism associated with? What did he describe as the greatest economic ill?
Milton Friedman
Inflation
How did Friedman believe governments should increase monetary value? What would this lead to?
By reducing its supply
Falling prices
What 2 ways can monetarism be successfully achieved?
Reduced government spending
Increasing interest rates to deter from credit
What 2 ways was monetarism applied?
Increasing interest rates
Supplying less money
What is a human cost as a result of monetarism? What happened to weaker firms that couldn’t borrow money?
Unemployment
They went bankrupt
What was the rate of inflation in 1979? How much in 1983?
19%
5%
What economic factor rose in Thatcher’s first years? How many people suffered?
Unemployment
1 million
What unrest was present as a result of unemployment? What took place in cities?
Social unrest
Riots
What had Thatcher’s first year been characterised by economically? What had the government granted for steel workers and miners?
U-turns
High pay rises
What nationalised car manufacturer was subsidised? How much had they seen inflation rise to?
British Leyland
19%
How did many people feel about Thatcher’s government economically in the first year? What did many feel about her policies?
It would go the same way as Heath’s government
They were failing
What dichotomy was present in the cabinet? What was this based on?
“Dries” and “wets”
Support
What policies did Thatcher assert would continue at the 1980 Tory conference? What did she famously say?
Monetarist policies
“U-turn if you want to; the lady’s not for turning”
Who introduced a monetarist budget in 1981? How much money was taken out of the economy?
Chancellor Geoffrey Howe
£4 billion
How many economists publicly called for a U-turn on the 1981 Budget? What did many people feel about the next election?
300
The government would be defeated
What economic policy became less significant in the mid-1980s? What stimulated the economy?
Monetarism
Greater demand
What was the stimulation of greater demand known as?
“Supply-side economics”
What are 4 policies of supply-side economics?
Tax reductions
Credit extensions
Demise of union power
Deregulation
Why did the government want to reduce its economic role? What controls were abolished?
They saw it as the cause of economic decline
Credit controls
What industry was deregulated? What was formed as a result?
Transport
Private transport companies
What institutions were beginning to take control of their own finances? What are 2 examples of these institutions?
Public institutions
Hospitals and schools
What development was overwhelmingly emphasised in deregulation?
Free-market development
What did Chancellor Nigel Lawson deregulate in 1986? What was this operated by?
Stock Exchange
Old customs and conventions
In what 2 ways did London become a city of world finance?
Lack of regulation
Instant transactions
What was the intention of privatisation? What could people own in privatised companies?
To collect revenue from popular capitalism
Shares
What are 4 examples of British companies sold off due to privatisation?
Gas
Telecom
Airways
Steel
Who had priority in purchasing nationalised industries? How much money did the government raise in 1988-89 from privatisation?
Small-scale private investors
£7 billion
What production was the economy also advantaged by? How much revenue did they produce in terms of national income by 1985?
North Sea gas and oil
15%
