Economics and Stop-Go policies between 1951-1964 Flashcards
1
Q
What was the trend of the Stop-Go policies?
A
- A Go time just before the next election and then a period of Stop time afterwards
2
Q
What was Butskellism?
A
- satirical term to refer to political consensus formed in the 1950s
- associated with Chancellor of the Exchequer Rab Butler of the Conservative Party and Hugh Gaitskell of the Labour Party
3
Q
What were the Stop-Go policies?
A
- Go: expanding economy, low interest rates and increased consumer spending
- Stop: economy overheating, wages an imports exceeding productivity and exports following a deflation of the economy through higher interest rates and spending cuts
4
Q
What is stagflation?
A
- Combination of stagnation and inflation
- inflation rate is high, the economic growth rate slows, and unemployment remains steadily high
5
Q
What is Keynesianism?
A
- view in the short run, especially during recessions, economic output is strongly influenced by aggregate demand (total spending in the economy)
6
Q
Who was Peter Thorneycroft?
A
- Macmillan’s chancellor
- Conservative MP from 1938
- resigned as chancellor of exchequer in 1958, returned to cabinet in 1960
- supporter of Margaret Thatcher
- 1958 opposed strong tax cuts (overruled)
7
Q
What was the defence spending like?
A
- military, naval bases, nuclear arms development programme
- 1964: £1.7 billion spent on defence, 10% of GDP
- R &D investment went to defence (34.5% from 1963-64)
8
Q
What was hire-purchase credit?
A
- enabled consumers to buy an unprecedented range of manufactured goods
- borrow much larger sums of money than obtain by saving
- pay off in years
9
Q
What was the impact of the go period between 1951-56?
A
- economy grew fast enough for Chancellor of the exchequer Butler to cut taxes and increase welfare spending
- maintained close to full employment
- Housing Macmillan fulfilled the 300,000 a year pledge (1953) a year early
- rationing was ended in July 1954
10
Q
What was the impact of the stop period between 1957-58?
A
- deflationary policy followed due to balance of payments crisis and a run on the pound
- Chancellor of the exchequer Peter Thorneycroft resigned when unable to cut the last £50 million off budget restriction targets along with Enoch Powell and Nigel Birch
- Macmillan referred to resignations as ‘a little local difficulty’
11
Q
What was the impact of the go period between 1958-60?
A
- economic boom
- introduced tax cutting pre-election budget of £370 million (1959)
12
Q
What was the impact of the stop period between 1960-62?
A
- chancellor of the exchequer Selwyn Lloyd adopted deflationary measures such as raising taxes
- and a ‘pay pause’ on all public sector workers (1961)
- negotiated a loan from the International Monetary Fund (IMF) in order to cover the money spend by Government to prop up the pound
13
Q
What organisation did Lloyd set up in 1961 and why?
A
- NEDC (National Economic Development Council)
- to involve government representatives, academics, Trade unionists and employers in long term economic planning
- in order to address the long term economic issues facing Britain
14
Q
What did Lloyd set up in 1962 and why?
A
- National Incomes Commission
- to monitor wages and prices
- they were a concern due to the tendency towards inflationary surges
15
Q
What was the impact of the Go period between 1963-64?
A
- deflationary measures were relaxed
- Chancellor of the Exchequer Reginald Maudling lowered the bank rate (4% in 1963 to 6% in 1964) to encourage increase in consumer spending
- end of 1964 deficit of £800 million (balance of payments crisis)
