Economic Developments: 1979 Budget

Question 1

Who was the Chancellor of the Exchequer from 1979-1983?

Answer 1

Geoffrey Howe

Question 2

What did Howe do to interest rates in the 1979 budget?

Answer 2

They were put up to 14%

Question 3

What was income tax cut to? What was it before?

Answer 3

Income tax was cut to 30%, it was previously 33%

Question 4

What was the highest standard rate of income tax cut to? What was it before?

Answer 4

Income tax was cut to 60%, it was previously 83%

Question 5

Why did Thatcher heavily cut higher rate income tax?

Answer 5

She believed it would offer an incentive for people in the normal income tax rate to improve their economic conditions

Question 6

What did the 1979 budget put VAT up to? What was it before?

Answer 6

VAT was put up to 15%, it was previously 8%

Question 7

What was the short-term impact of increasing VAT?

Answer 7

It increased inflation

Question 8

What had inflation gone up by from 1979 to the end of 1980?

Answer 8

It had gone from 11% to 22%

Question 9

What happened to interest rates in November 1979?

Answer 9

They were put up to 17%

Question 10

How can it be seen that some Conservatives were doubting Thatcher and her Monetarist policies?

Answer 10

A Conservative backbencher denounced Thatcher in a letter to a left-leaning newspaper