Economic Developments Flashcards
Info that is on the specification
Why could the conservative party be considered lucky coming into power at this time?
- the post-war economic recovery was beginning to show
- the 1950s held the general pattern of continued economic improvement
What are the key components of the post-war boom?
- end of food rationing (1954)
- baby boom
- global economy
- industry
- employment
What was the increase of births causing the ‘baby boom’?
5% (2 million)
How had the global economy improved?
increase in overseas trade = high levels of earning from exports
How had employment improved?
reached full employment by 1955 (only 200,000 unemployed)
How did the service industry expand?
- by 1960 nearly 5 million people were employed in this industry
How did wages get impacted by this economic boom?
due to economic growth and low unemployment wages were increased
What did the conservatives have as a tax budget?
a ‘give away’ budget = £134 million tax cut
Who did this tax budget apply to?
middle class
What were people more able to enjoy?
- jobs
- money
- goods
How did people feeling more affluent help the economy?
there was a growth in consumerism
What are stop go economics?
when there are tensions between an expanding economy (go) and the results of the economy overheating (stop)
Why was there a balance of payments issue?
caused by a trade deficit
Why was there a trade deficit?
because higher salaries created a large internal consumer demand however this high demand did not encourage manufacturers to increase their export trade - leading to the trade deficit
What did pressure from America cause for the economy after the Suez crisis?
a run on the pound
What is a run on the pound?
when the pound decreases in value in comparison to the dollar
How did the growth in wages negatively impact the economy?
it outstripped the rate of increase in production which led to inflation
Who was Macmillan’s chancellor during this time?
Peter Thorneycroft
What was Thorneycroft’s beliefs?
monetarism - limit wage increases & to cut the money supply
Who was the main person who opposed Thorneycroft?
Iain McLeod
Why did McLeod oppose Thorneycroft?
because it would lead to increased unemployment and cutbacks in housing
What did this disagreement symbolise?
the problems with stop-go economics
What did Macmillan end up doing?
- agreed with McLeod
- wanted to keep up an expansionist economic policy
What happened to Thorneycroft after this?
- suggested drastic spending cuts (1958) - overruled by Macmillan
- resigned alongside two of his junior ministers (Enoch Powell & Nigel Birch)
How did Britain recover after the balance of payments crisis?
- Sterling regained its value
- Thorneycroft and Powell did not make any long lasting negative effect on the Conservative party
- April 1959 provided tax cuts of £370 million
How did Britain not recover from the balance of payments crisis?
- still trapped in the ‘stop-go’ economics
- pay pause introduced - to hold down wage inflation
- loan from IMF (International Monetary Fund)
