Economic developments Flashcards
What events shaped the post war concensus?
The great depression of the 1930s, a time of misery, mass unemployment and a failure by the government to solve any problems
WW2 when there was a national effort to defeat forces of evil, led to shared sacrifice
The rebuilding of Post war Britain under Attlee’s Labour governments and the establishment of a welfare state
What were the consequence of the key events?
Public opinion was that life should never again be as bad as the hungry thirties or the war that followed. The sacrifices they had to make meant they thought a better, fairer Britain was deserved. This was the basis of the post war consensus
How were the Conservatives lucky?
They came to power just as the beginnings of the post war economic recovery began to show. It was a time of continued improvement as there was a post war boom. The global economy boomed as countried rebuilt after the war, this led to an increase in overseas trade which brought high earning from exports and investment
When did rationing end?
1954
By 1955 what percent of the workforce were unemployed?
Less than 1%
How did people’s lives improve?
Wartime austerity was over and the British people were enjoying a higher standard of living than ever before. Economic growth and low unemployment brought rising wages. People felt more affluent so there was a growth in consumerism with people having the money to spend on cars, appliances, luxuries and entertainment
In the run up to the 1955 election who was able and how to boost Conservative prospects?
The chancellor, Rab Butler, made a giveaway budget that gave the middle classes £134 million in tax cuts
How did the Conservatives try manage the economic crisis?
Macmillan famously said in an appeal to the industry and public, ‘What we need is restraint and common sense- restraint in the demands we make and common sense in how we spend our income’. But it was difficult to persuade trade unions their members didn’t need higher wages. Therefore, government controls had to be employed
What was the economic picture really like?
The economic picture was not as positive as the growth in affluence would suggest. The growth in wages was outstripping the rate of production, which brought inflation
How did the government use controls to manage the economy?
Controls had to be used to curb excessive inflation and taxation remained high, to control excessive spending that would lead to an unwanted increase in imports, and to pay for the rising costs of public services. This pattern of controlling growth when the economy was in danger of overheating was known as ‘Stop-go’ economics
Why were there issues with the balance of payments?
Higher salaries created large internal consumer demand without encouraging manufacturers to increase export trade which would have bolster export industries. Therefore, there was a trade deficit.
What were the consequences of pressure from the US over the Suez crisis?
It exposed Britain’s financial weakness and started a run on the pound
What was the 1957 row?
There were serious cabinet divisions- chancellor Thorneycroft believed in monetarism and wanted to limit wage increases and cut the money supply but Macmillan sided with those who wanted to keep up the expansionist economic policy, ministers like McLeod who were one nation Tories opposed the drastic spending cuts of 87 as it would increase unemployment and lead to housing cutbacks. After Macmillan overruled him on the cuts, Thorneycroft resigned. The post war concensus remained
What did Macmillan say about people’s quality of life in 1957?
‘most of our people have never had it so good’
Did the economic crisis of 1957 do lasting damage?
No the sterling regained its value against the dollar and the economy grew so much that the budget of 1959 provided tax cuts of £370 million, even more than Butler’s give away budget of 1955. This sense of economic affluence reflected in the budget was a key factor in Macmillan’s comfortable reelection in 1959
What happened in 1961?
The government were trapped in a cycle of stop go economics. Worries about the economy overheating forced the government to introduce a ‘pay pause’ to slow wage inflation. The government also asked for a loan from the IMF. Economic growth in Europe had begun to leave Britain behind as trade with the Commonwealth and Empire was insufficient. So Macmillan decided Britain’s economy should be joined with Europe so Britain applied to join the EEC and in 1962 a national incomes commission was established to keep an eye on wages and prices
What was the 1961 application to join the EEC a sign of?
It was a reversal of his party’s previous policy and showed the failure in bringing about economic modernisation. It was then rejected in 1963
What was the Beeching report?
It was published in 1963 as part of a review into cutting public expenditure. It recommended massive cuts to Britain’s rail network, closing more than 30% of the rail network.. There was great public uproar at the fundamental social change it would cause as many rural areas would be left isolated. The government was no longer surfing on a wave of prosperity and economic success
