Economic challenges

Question 1

What was a key feature of 1954-64?

Answer 1

Growth of consumer affluence & ability of people in Britain to borrow and spend more on consumer goods than ever before!

Question 2

What did the government encourage & could they deal with this?

Answer 2

Encouraged this new spending- but struggled to deal with its consequences.

Question 3

What did they put in place as a result?

Answer 3

Relaxed laws surrounding consumer credit & borrowing however had to employ a strategy that critics described as ‘stop-go’ economics.

Question 4

The conservatives allowed the consumer economy to grow, however what did excessive spending tend to result in?

Answer 4

• Growth in inflation
• Result- increase in imports which led to balance of payments problems.

Question 5

In order to counter this what did Macmillan (serving as Edens chancellor) do & what did this do to exports?

Answer 5

Deliberately slowed down the economy by raising interest rates & taxes. Made exports less competitive & resentment from tax payers.

Question 6

What did the ‘stop go’ policy refer to?

Answer 6

A failure of gov to develop consistent policies to ensure growth.

Question 7

What did the government do in ‘stop-go’ economics?

Answer 7

• Tend to increase taxes and raise interest rates- to make it difficult to borrow money for investment in order to slow things down when the economy grew too quickly.
• They would reduce them again in the slowdown to make money easier to borrow & facilitate an acceleration

Question 8

What was NEDDY?

Answer 8

• Institution where management & unions could discuss the development of the economy & co-operate with one another.
• Assumed they would want to work together as they would both benefit from long term economic growth.

Question 9

What was NEDDY unable to enforce?

Answer 9

Any legal control over either industry or unions, and the government hoped that both sides would come to voluntary agreements with each other.

Question 10

What was NICKY?

Answer 10

An advisory council assembled from economists and industry experts.

Question 11

What was NICKY’s role?

Answer 11

Its role was to give guidance to employers and unions on what the government considered ‘reasonable’ pay increases.

Question 12

What could NICKY not do?

Answer 12

NICKY- could not enforce any of its decisions.

Question 13

What could NICKY not do?

Answer 13

Unions- ignored NICKY’S calls for wage restraint.

Question 14

What were union bosses mindful of?

Answer 14

• Mindful that members wanted to improve living standards & greater spending power.
• The new consumerism of the 1960s was attractive to union members and they wanted to participate, so ignored appeals for wage restraint.