Economic crises and recovery, 1966-89

Question 1

What was the extent of economic growth after 1966?

Answer 1

It was at a lower than normal rate.

Question 2

What did the government decide to do to improve the economy after the recession 1966-67?

Answer 2

• They accepted that they had to intervene more, bringing in a new system of federal and regional budgeting.
• There were also increasing levels of spending on social welfare.
• Export figures stayed high at this time despite the crises that ensued.

Question 3

What happened to trade and unemployment during the recession?

Answer 3

Trade reduced and unemployment increased.

Question 4

What happened to guest workers during the recession?

Answer 4

Many left Germany. There were 1.3 million in 1966 and only 991,000 by 1967.

Question 5

What happened to public spending during the recession?

Answer 5

It was spiraling out of control - in 1965, 46.7 million DM spent on social welfare whereas in 1970 115.9 million was spend on social welfare.

Question 6

Who became economics minister in 1966?

Answer 6

Karl Schiller

Question 7

What happened to government intervention in the economy once Schiller became economics minister?

Answer 7

Increased government intervention.

Question 8

What measures did Schiller introduce to help deal with the recession?

Answer 8

• Introduced subsidies to agriculture and coal industry.
• Reintroduced cartels to stop prices rising.
• 1967 Economic Stabilisation Law allowed for government intervention in times of crisis to limit regional spending and introduced a 5 year plan system for all government spending.
• In 1968 there was a new provision added to the Basic Law that allowed the Federal government to move money from the wealthy Lander to provide more social welfare to the struggling ones.

Question 9

How were Schiller’s economic policies regarded?

Answer 9

As a failure - he was replaced by Helmut Schmidt in 1972.

Question 10

What did the FRG rely on as fuel for cars?

Answer 10

Oil rather than coal.

Question 11

How much did the FRG spend on oil in 1972, 1973 and 1978?

Answer 11

140 million tonnes of oil cost 10.8 billion DM in 1972, 32.8 billion DM in 1973 and 49 billion DM in 1978.

Question 12

Why did oil prices increase in 1973?

Answer 12

The Fourth Arab-Israeli War broke out and OPEC put up prices sharply.

Question 13

How much of its fuel did the FRG get through OPEC?

Answer 13

40%

Question 14

When did the economic crisis hit in the FRG after the oil crises?

Answer 14

1974-75

Question 15

What happened to the economy in 1964-75 as a result of the oil crises?

Answer 15

Unemployment rose sharply

Question 16

What happened to the recruitment of guest workers during the oil crises?

Answer 16

It was banned to prevent the crisis from getting worse.

Question 17

What did the government introduce to help deal with the oil crises?

Answer 17

• Encouraged car-free Sundays - limiting oil consumption
• Introduced speed limits on autobahns
• Propaganda pushed energy saving tactics
• Invested in atomic power to reduce defence on oil
• Did not subsidise oil prices and encouraged cutbacks
• As a result, industries converted to new fuels rapidly
• Public spending cuts
• Higher income tax introduced in 1975

Question 18

How successful were the government measures in dealing with the oil crises?

Answer 18

Quite successful - Oil consumption dropped and exports stayed high. The FRG recovered more quickly than other countries.

Question 19

What happened to the gap between the richest and poorest in the 1980s?

Answer 19

It widened.

Question 20

To which group was there hostility towards in the 1980s?

Answer 20

Guest workers.

Question 21

What happened to prices in the 1980s?

Answer 21

They began to rise with inflation.

Question 22

What did unemployment stand at in 1981?

Answer 22

1.7 million - the highest since 1950. This drove up the amount of spending on unemployment benefits and assistance for the long-term unemployed.

Question 23

Who became president in 1974?

Answer 23

Helmut Schmidt

Question 24

Who became president in 1982?

Answer 24

Helmut Kohl

Question 25

What happened to public spending in 1981?

Answer 25

It was cut down, (deeply unpopular) this became more extreme under Kohl after 1982, who cut social welfare spending, including maternity benefit.

Question 26

How did Kohl’s government deal with economic challenges in the 1982?

Answer 26

• Cut public spending
• Cut public holidays
• Reduced the retirement age to 58
• They sold off shares in state-run institutions (Volkswagen, the state airline Lufthansa), partially privatising them.

Question 27

How had the economy improved by 1989?

Answer 27

Unemployment was now at its lowest and the economic growth rate had increased.

Question 28

Why did exports remain high during the oil crisis of 1973?

Answer 28

Schmidt worked hard to persuade other world leaders not to introduce protective tariffs to limit world trade.

Question 29

What were there arguments about in the Bundestag about in the 1980s?

Answer 29

Whether to create more work by reducing the working week, or setting up job-share programmes to get the unemployed back into at least part-time work.