Economic Developments Before The 1992 Election

Question 1

What was the economy like that major inherited from thatcher?

Answer 1

-was a bleak inheritance
-with manufacturing output in decline, high interest rates + slump in house prices

Question 2

How did this bleak inheritance affect unemployment?

Answer 2

-steel rise in unemployment
-rose from 1.6m to 2.6m 1991-92

Question 3

What was the Lawson boom

Answer 3

-rapid rise in house prices at end of 80s so more bought houses as didn’t want to miss out on low prices
-homeowners felt they were getting richer so increased property purchases in early 90s

Question 4

What was the negative outcome of the Lawson boom

Answer 4

-fall in house prices then led to negative equity

Question 5

What was negative equity

Answer 5

-having to repay mortgages that were higher than current value of their homes
-many homes were repossessed

Question 6

What was the impact of negative equity

Answer 6

-300k households in negative equity start of 1992
-900k by end of 1992

Question 7

What was the vicious cycle of negative equity

Answer 7

-interest rates up mortgages more expensive
-house prices down as fewer buyers
-number in negative equity up along with house repossessions
-houses on market decreases
-market insecurity puts people off buying
-house prices down again

Question 8

Who did the 80s recession impact

Answer 8

-affected working class esp in northern England
-main lab demographic of voters

Question 9

Who did the 1992 recession impact

Answer 9

-impacted middle class families esp southern England
-surprising tories win due to this as traditional Tory voter base suffering