economic policies and problems including devaluation

Question 1

what was one of the key priorities for the labour government

Answer 1

modernisation of the British economy

Question 2

by 1964

Answer 2

widely accepted that Britain was lagging behind other countries such as West Germany + Japan

Question 3

the affluence of the post-war boom

Answer 3

not reflected in the productivity or growth rates

Question 4

britain’s economy seemed to be trapped in the cycle of ‘stop-go’ with:

Answer 4

-bursts of prosperity always lead to inflation
-run on the pound
-regular crisis over the balance of payments

Question 5

what was the key aim of Wilson’s gov in 1964?

Answer 5

reorganising the economy to break out of this cycle of ‘stop=go’

Question 6

labour inherited a deficit of?

Answer 6

£800 million

Question 7

two classic economic solutions to this kind of problems were?

Answer 7

deflation or devaluation

Question 8

who was wilsons chancellor of the exchequer?

Answer 8

james callaghan

Question 9

james callaghan and wilson did not want to do

Answer 9

deflation or devaluation

Question 10

devaluation

Answer 10

lowers the value of a currency in comparison to others in a fixed exchange system

Question 11

what would deflation do?

Answer 11

-support the value of the pound
-prevent inflation
-but it was an old ‘stop-go’ approach that Labour Party determined to break away from

Question 12

fear regarding deflation

Answer 12

it would stop the Labour Party from meeting its manifesto commitments of extra spending on welfare + technology

Question 13

what would devaluation do?

Answer 13

make imports more expensive + help exports by making British goods cheaper in other countries = help balance of payments

Question 14

problem with devaluation

Answer 14

-make Britain look weaker in the world + make it weaker

Question 15

wilson fears about devaulation

Answer 15

feared that the Labour Party would gain reputation as the party of devaluation under Attle in 1949

Question 16

what is the DEA

Answer 16

Department of Economic Affairs
- led by george brown in attempt to break out of the stop go cycle
- set growth targets, created economic planning councils

Question 17

what was the problem with the DEA

Answer 17

the treasury resented the dea attempting to control economic policy
- chancellor callaghan was unhappy about browns influence
- brown balmed as he could be impulsive and inconsistent

Question 18

what happens to Brown and the DEA

Answer 18

1966 brown moved to the foreign office
1967 DEA abandoned

Question 19

prices and income policy

Answer 19

government intervention to set limits on price rises and to call for wage restraints in negotiations between unions + employers
increases in the aim of tackling inflation

Question 20

what was the impact of the price and income policy

Answer 20

• long seamen’s strike in 1966
• frank cousins resigns from cabinet
• criticism of Wilson from the left
  -relationship between the gov + unions starting to breakdown

Question 21

why did wilson decide the devalue the pound

Answer 21

• deflationary policies were not working
• in 1967 oil supplies are affected due to the outbreak of war in the middle east
• major dock strikes in august affect export
• in economic crisis

Question 22

who was roy jenkins

Answer 22

-under Harold Wilson served as home secretary 1965-67
-chancellor from 1967-70

Question 23

what did Roy Jenkins use

Answer 23

deflationary methods
-raised taxes
-tightened up gov spending in all areas of the economy, priority to improving BOP

Question 24

1969 Jenkins achieved

Answer 24

a balance of payments surplus
-1969-70 inflation was still running at 12%

Question 25

improvement in the economic situation from 1969 was

Answer 25

key factor in making labour confident of victory in 1970 general election