Blair's economy Flashcards
What did chancellor Gordon Brown change to do with he Bank of England?
-Made the bank of England independent
-Thus the bank of England were responsible for setting interest rates.
-Changed the inflation measure from the reial price index to the consumer price index.
-Transferred responsibility for banking supervision to the financial services authority.
What was the weakness of Brown changing up the bank of England’s power?
Some economic commentators have argued that this division made the 2007 global banking crisis worse for Britain.
What did Brown pledge not to do in 1997?
In 1997 and subsequently after Brown pledged to not increase the basic or higher rates of income tax.
Over his time [Gordon Brown] in chancellorship what was the basic tax rate reduced by?
Over his chancellorship he reduced the basic rate from 23% to 20%
What is the positive of his tax reducing actions?
Tax cuts are good for business, small and big. These measures were in total reassuring to the electorate as well as industrialists and financiers.
When did public spending become the main policy of Labour?
After the 2001 election
What was Tony Blair’s 1997 election slogan?
Education, Education, Education
Why was Blair adamant to increase education?
Blair wanted Britain to have a skilled workforce, in addition he also helped to finish the transition of Britain becoming a financial service economy in the new world markets. Skilled workers were key in a service economy due to their higher level of education compared to other workers around the world.
Where did the government spend their money mainly?
Public services such as schools and hospitals.
What was the criticism for the public spending policies?
Critics warned that public spending was way too high and government borrowing was too high.
What had Brown achieved by 2007?
-Inflation was under control
-House prices had increased
-Record numbers were in work
-Living standards were high
-Consumerism boomed
What did critics say about the rising house prices which then turned out to be true?
Critics argued that the consumer boom was based on increasing house prices and high levels of credit card spending and debt. Many warned that there was real danger that the bubble of middle-class prosperity could burst.
They were right when the 2008 financial crash came about.
What did economists Will Hutton warn about the consumer boom?
Economists such as Will Hutton, warned that the consumer boom was based on rising house prices and on high levels of credit card spending and personal debt, rather than an increased productivity rate. There was a big danger that the middle class housing bubble of prosperity would burst and in 2008 that bubble did burst during the 2008 financial crisis.
What had Brown done 1997 -2001 which contradicted his post 2001 economic policy?
Brown actively went against borrowing in his early period in charge of the countries economic interest. Browns set the treasury rules about how much could be borrowed by the government. In this essence he was partly following the Thatcherite belief that the supply of money needed to be controlled.
What big economic act was introduced in 1998?
National minimum wage act of 1998,
What did the National minimum wage act of 1998 bring in?
Created a minimum wage of £4.85. It was a flagship policy of the Labour party during its 1997 election campaign and is still pronounced today in Labour party circulars as an outstanding gain for ‘at least 1.5 million people’. The national minimum wage took effect on the 1st April 1999.
What did the increase in regulations of the trade unions do?
Regulations with the trade unions definitely increased productivity.
What tax levels did Labour want to reach?
Labour wanted to reach the tax levels of 10p per pound
When did Labour achieve the tax levels of 10p per pound?
They achieved this figure at the 1999 budget
What level of inflation did Labour maintain?
2.5%
What does the 2.5% level of inflation show?
This level shows that the GDP and the economy is growing.
How could Blair pass through economic plans and legislation so easily?
Overwhelming majority in the house of commons, this is evident with him not losing a single vote until 2003.
What is a PFI?
private finance initiative
What is good about PFIs?
short term they are good as it doesn’t use government money to build new projects and infrastructure such as schools, hospitals and railways.
What is bad about PFIs?
Long term the policy is very bad for the economy and for the debt of the country too as it leads to the government paying interest and finance the project over time. Overall it just leads to a lot of debt.
