3 The response to economic challenges, 1951-79 Flashcards
summarise britains economic status in the period between 1950-1979
there was a huge expansion in the world economy during the 50s and 60s in a global recovery led by new technologies
- although GB had a consumer boom it also had a decline
- personal expenditure grew and consumer demand fuelled the economy, GB spending more than it earned, led to: balance of payment issues, devaluation, inflation, union disputes, unemployment in the 70s
conservatives and the post-war economy, 1951-64
- 1951 conservatives returned to power and were opposed to any further nationalisation, rationing, and controlling the economy
- unemployment averaged 500000 with lows of 300000
- political consensus meant:
a commitment to full employment (using Keynesian style schemes) and a mixed economy ( would not nationalise further but would not reduce it either)
when was rationing over
- by 1954 all rationing was over
-stop go economics
1954-64 there was a growth in consumer affluence and the peoples ability to borrow and spend more on consumer goods
- the government encouraged the spending but struggled to deal with its consequences
consequences of growing consumer economy led to
- conservatives allowed the consumer economy to grow but with spending came inflation and an increase in imports (balance of payments issues)
-stop-go economics demonstrated what
Macmillan
- to counter this Macmillan (under Eden as chancellor of exchequer) deliberately slowed the economy by increasing interest rates and taxes;
- led to exports becoming less competitive and resentment from taxpayers
- demonstrated that you couldn’t control employment and inflation
economic growth in britain compared to japan in 1960
- despite rising living standards GB was falling behind compared to other countries: Japan had 12% growth in 1960 but GB only had 4%
what did Macmillan believe in
what 2 organisations did he set up
‘one nation’ where everyone, despite class, worked together for the benefit of the country
- experimented with corporatism; uniting labour, management and government to achieve goals
- set up 2 organisations to do this: NEDDY (national development council and office) and NICKY (the national incomes commision)
- NEDDY= where management and unions could discuss issues and co-operate with one another; assumed that they would want to work together but NEDDY was unable to enforce any legal control and so all agreement were voluntary
- NICKY= advisory council made up of economists and industry experts who gave guidance to employers and unions over ‘considerable’ pay increases but could not enforce its decision
unemployment in 1963
-grew to its highest level since WW2, 878000
- economic problems by 1964
imf loan in what year
increased consumer spending increased demand for foreign goods and GB experienced a balance of payments problem which threatened the pound
- Aug 1961 the government refused to devalue the pound and borrowed £714m from the IMF to support it
summarise The Wilson government and the economy, 1964-70
- aimed to modernise the economy
- prices and income tax
- there were recurring balance of payment deficits, gradually increasing inflation and failure of voluntary wage restraint
-The IRC
- Industrial Reorganisation Corporation; promoted efficient practices in industry and offered loans to companies who wanted to implement new efficieny measures
- promoted mergers between businesses where the economics wold be more efficient; many of them failed though e.g British Leyland made from Leyland Motors and the British Motor Corporation which we given a £25m loan to merge however they couldn’t keep up with other companies from Europe and Japan and were then known for poor quality as they operated at a loss and required subsidies
devaluation
in 1967
- 1967 pound was reduced from $2.80 to $2.40 (14%)
The heath government and the economy, 1970-4
- intended to reject corporatism and embrace free market ideas
- got rid of the IRC
- made cuts to council houses, free school milk and raised charges on prescriptions
- believed it was private businesses who should help the economy not the state; wanted to reduce tax pressure