Economic Developments Flashcards
What was the Post war boom?
After ww2 economy grew as countries began to recover from effects of war
When did food rationing end?
1954
What was achieved in 1955?
Full employment
What else?
Increase in productivity and global trade
And tax cuts
+ wage increases
What did the post war boom allow?
Allowed people to buy more consumer goods which encouraged greater investment and growth
What did the post war boom lead to?
Increased living standards do encouraged growth in birth rates
However what was wrong? Although..
Although people felt richer and improved living the economic growth was not as strong as other countries
West Germany vs United Kingdom
Industrial production between 1952-59
West Germany = 99 increase
United Kingdom = 28 increase
Inflation issues = Danger that
Danger that economy would grow faster than increases in productivity
So demand would outstrip supply = inflation
Balance of payment issues = Danger that
Increased consumer demand would lead to Britain importing more than exporting
= lead to balance of payment problems and run on pound
Stop to economics - When economy slowed down too much
Government would increase wages and lower interest rates
Stop go economics- When economy overheated and inflation increases
Government would raise interest rates and freeze wages
What did the suez crisis demonstrate and what did Enoch Powell/ conservatives goes suggest
The underlying weakness of the British economy and stop go economics
Suggested instead of managing country by demand, manage country by controlling money supply ( monetarism) = would have to be cuts to welfare system ,housing and public services = unpopular so MacMillan said no
Improvement after suez
Economy recovered quickly
Sterling recovered against US dollar
Gov could make big tax cuts in 1959
Economy grew fastest rates 1960-64
International Monetary Fund
1961 government needed to apply for International Monetary Fund loan which forced them to introduce pay pauses to keep inflation low
