3 The response to economic challenges, 1951-79 Flashcards

1
Q

summarise britains economic status in the period between 1950-1979

A

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
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2
Q

conservatives and the post-war economy, 1951-64

A
  • 1951 conservatives returned to power and were opposed to any further nationalisation, rationing, and controlling the economy
  • unemployment averaged 500000 with lows of 300000
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3
Q
  • political consensus meant:
A

a commitment to full employment (using Keynesian style schemes) and a mixed economy ( would not nationalise further but would not reduce it either)

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4
Q

when was rationing over

A
  • by 1954 all rationing was over
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5
Q

-stop go economics

A

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
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6
Q

consequences of growing consumer economy led to

A
  • conservatives allowed the consumer economy to grow but with spending came inflation and an increase in imports (balance of payments issues)
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7
Q

-stop-go economics demonstrated what

Macmillan

A
  • 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
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8
Q

economic growth in britain compared to japan in 1960

A
  • despite rising living standards GB was falling behind compared to other countries: Japan had 12% growth in 1960 but GB only had 4%
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9
Q

what did Macmillan believe in

what 2 organisations did he set up

A

‘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
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10
Q

unemployment in 1963

A

-grew to its highest level since WW2, 878000

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11
Q
  • economic problems by 1964

imf loan in what year

A

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
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12
Q

summarise The Wilson government and the economy, 1964-70

A
  • 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
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13
Q

-The IRC

A
  • 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
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14
Q

devaluation

in 1967

A
  • 1967 pound was reduced from $2.80 to $2.40 (14%)
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15
Q

The heath government and the economy, 1970-4

A
  • 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
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16
Q

what was - one of the biggest problems 1974-79

A
  • one of the biggest problems 1974-79 was inflation
    • by mid 70s prices were rising faster than wages reaching >30% by 1975
    • unions ignored pleas from government to stop wage demands due to worsening living conditions and increased prices
17
Q
  • by 1975 Labour Chancellor Denis Healey argued against which of labours policys
A

began to challenge labours committment to full employment and felt that pumping money into the economy was pointless and the cause of inflation

18
Q

-the IMF loan

A
  • the IMF loaned GB £4b but there were conditions: had to prove it was capable of repaying it debts by agreeing to a £3b spending cuts
    • when healey announced this he was called a traitor by the left of the party but he argued that GB was living beyond its means
19
Q

what did Tony Benn, propose

A
  • the left of the party, led by Tony Benn, proposed an alternative strategy
    • the strategy was referred to as a siege economy and cllaghan dismissed Benn’s arguments and unworkable and unrealistic
20
Q

what did Tony Benn, argue about the welfare state

A

and argued that the welfare state needed to be protected from cuts imposed by the IMF by: using trade barrier to keep out foreign imports; making GB economically self sufficient by investing in industry and nationalisation; withdrawal from the EEC

21
Q

by supporting healey, Callaghan indicated a movement towards what kind of thinking

A
  • by supporting heal, Callaghan indicated a move away from post war Keynesian consensus towards monetarist thinking (tight reign on money supply to prevent inflation, would cause some unemployment but inflation was already doing that)