Economic Developments

Question 1

Why was there a post-war boom

Answer 1

Economies grew after the effects of the war
An increase in global trade
Productivity increase
Tax cuts

Question 2

What was the baby boom

Answer 2

An acceleration in brith rated at the end of WW2 leading to a fast growing population

Question 3

Population by 1961

Answer 3

51 million, 2 million more than 1951

Question 4

When was full employment estimated to have been achieved, and how many were unemployed.

Answer 4

By 1955

200,000 unemployed, less than 1% of the workforce

Question 5

Which industries saw a growth and which saw a decline

Answer 5

Growth in service industries
Decline in traditional industries
Modernisation of Britain

Question 6

Public feeling at the time

Answer 6

People felt more affluent
People enjoyed rising wages
Butler issued £134 million in tax cuts

Question 7

What is the ‘go’ in ‘stop-go’ economics

Answer 7

With low interest rates and rising customer spending, the economy started overheating with wages and imports exceeding productivity and exports.

Question 8

What is the ‘stop’ in ‘stop-go’ economics?

Answer 8

The government issues higher interest rates and wage freezes therefore leading to falling demand and a decreasing output.

Question 9

Why was there a ‘stop-go’ cycle

Answer 9

After demand falls and output decreased, the government removed ‘stop’ controls leading to an increase in demand and rising imports causing the cycle to start again.

Question 10

What is a balance of payments crisis?

Answer 10

When imports exceed exports

Question 11

What is the balance of trade?

Answer 11

The difference between imported and exported physical goods

Question 12

What is the balance of payments?

Answer 12

The difference between the visible trade of physical goods and invisible services such as shipping, banking and insurance.

Question 13

Was the UK in a sustainable position in terms of balance of trade?

Answer 13

No, the UK was in a deficit of balance of trade throughout this whole period
Example: A deficit of £345 million between 1951-55

Question 14

Suez crisis effect on Britains economy

Answer 14

US pressure over the crisis led them to start a run on the pound and expose the faults of ‘stop-go’ economics, leading to the financial crisis of 1957.

Question 15

What was the division over the solution to this crisis?

Answer 15

Peter Thorneycroft believed in ‘monetarism’ - wanting to limit wage increases and cut the money supply.
One nation conservatives like Ian McLeod were strongly opposed to this as would lead to an increase in unemployment and cutbacks on housing.

Question 16

Macmillans decision

Answer 16

Sided with those wanting an expansionist economic policy, overruled Thorneycrofts spending cut proposal in 1958 leading him to resign.
He stuck to the principals of the post-war consensus.

Question 17

Developments in the late 1950s

Answer 17

Sterling regained its value against the dollar.
Tax cuts of £370 million were able to be employed in April 1959
A general air of consumerism led to Macmillans victory in October 1959

Question 18

Economic difficulties in the 1960s

Answer 18

Stop go cycle
Balance of payments problem
EEC rejection 1963

Question 19

What did the Beeching Report state and lead to in 1963.

Answer 19

Recommended massive cuts in Britains rail network
Closure of more than 30% of rail network
Hundreds of branch lines and stations were axed —-> public outrage, isolated rural areas.

Question 20

Overview of period

Answer 20

Trapped in the cycle of ‘stop-go’ economics under the guise of prosperity and luxury
Instability throughout with suez crisis and 1957 financial crisis, balance of payments issues.
HOWEVER
Much affluence and rising living standards, expansion of the economy.