Chapter 14- Thatchers economy Flashcards
what was monetarism
economic theory whereby controlling money supply and government spending and borrowing inflation would be reduced
what was the inflation rate in 1980
15%
what was the unemployment number in 1980
above 2 million
what saved Britain from serious balance of payments crisis in 1980
North Sea oil and gas
what did the 1981 conservative budget include
even further monetarist measures
what did Howe describe the 1981 budget as
‘the most unpopular budget in history’
how did income tax change under monetarism
top bracket- 83%-40% by 1988
standard rate- 33%-25%
how did VAT change during monetarism
went from 8-15% in 1980
who did thatcher see as enemies and why
left wing councils
they spent too much and wasted resources
who was Ken Livingston
head of the Greater London council who thatcher battled with
face of the loony left
what was the loony left
name given by rich wing media about left wing local councils that promoted liberalisation and political correctness
what was rate capping
introduced in 1995 to cap how much local councils copied raise in taxation
which councils tried to rebel against rate capping and what happened to them
sheffield and liverpool
refused to set budgets
stopped as faced by bankrupt
what did the local government act abolish in 1986
big metropolitan councils set up under heath
what was the result of there local governments act
central government gained a lot of power it took away from local governments
big win against loony left
when was monetarism scrapped
1986
what was monetarism replaced by
privatisation and deregulation
what industries were privatised under thatcher
BP- 1979
British aerospace- 1981
British Gas- 1986
British airways- 1987
role royce- 1987
how did the number of individuals owning stocks change from 1979-1990
went from 3 million-9 million
what was deregulation
cutting back on government intervention to encourage entrepreneurship and wealth creation
what did the loan guarantee scheme do
make it easier for businesses to borrow money
what did the enterprise allowance scheme do
gave starting businesses £40 a week for a year to start up
what was financial deregulation
the loosening of control over banks and financial markets
what were the results of financial deregulation
led to a massive boom of investment banking and financial speculation
what was the ‘Big Bang’ 27th October 1986
deregulation of stock exchange
opened way for computer screen trading
foreign banks could now operate as stockbrokers
what new breed of dealers appeared with the Big Bang
Yuppies
what did London become seen as after the Big Bang
a place where big risks could be taken and a lot of monety could be made
on par with Wall Street
what was the growtn rate (GDP) of Britain look like from 1980-88
2.2%
higher than Germany
on par with seventies
what was done to control inflation
interest rates raised to 17% in 1979
what was the problem with increasing interest rates
harder for businesses to borrow and value of pound to increase making businesses output decrease.
what happened to the economy in 1980 and what did this mean for businesses
went I to recession so they went bankrupt
what was inflation in may 1980
22%
what was inflation by 1986
2.5%
what was inflation by 1990
10.9%
what happened to unemployment as a result of reducing inflation
increased as industry had to become more competitive
what was the impact of monetarism on industry
many industry plants closed down
mainly in midlands, Scotland, and South Wales
by how much did manufacturing output fall from 1979-81
15%
what were the effects of monetarism on production
fell 25% in West Midlands
steel production cut 30%
what was unemployment in 1983
over 3 million
when did unemployment next drop ti under 3 million
1988
what was the unemployment rate in Liverpool in the 80%
25%
what was the youth employment scheme
employers received subsidies to take on young workers
how many less people were employed in manufacturing in 1990 compared to 1979
2.1 million
what was Econo,ic realignment
moving British economy away from heavy industry and manufacturing and towards services
what effect did economic realignment have on the north and south
worse for the north
emphasised north-south divide
what did Howe advise Thatcher in 1981
cities such as Liverpool could be left in ‘managed decline’
what were the riots in brixton, Liverpool and Birmingham said to be due to by the Scarman report
race and poverty
how much less effective were British workers compared to those in Europe in 1984
31%
