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)
16
Q
What was the rate of the imports and exports like between 1961-64?
A
- exports over 10%
- imports nearly 20% higher
17
Q
What were the successes of the ‘Stop-Go’ policies?
A
- government expenditure on housing, health and education rose
- clear expansion in some industries like cars (1960-65 sales of private cars increased from 1.5 to 5.5 million) and aircraft and chemicals
- standard of living rose
- end to austerity increasing consumer choice
- property ownership boomed (home-owning rose from 25% in 1939 to 44% in 1964)
- Tax-cutting budgets like those in 1955 and 1959, financial crises were short lived, led to optimistic mood
18
Q
What were the failures of the ‘Stop-Go’ policies?
A
- stagflation occurred
- 1957 Rent Act led to higher rents
- Prices for UK products were uncompetitive, due to high production costs
- decline in textiles and shipbuilding due to insufficient investment
- insufficient government R&D spending, due to high defence spending
- unemployment rose in late 50s and mid 60s
- 1961 ‘pay pause’ and 1963 Beeching Report led to anger and social division
- UKs GDP growth was lowest in Europe
- Ongoing and rising balance of payments deficits
- Sterling Crisis: e.g. 1957, the “run on the pound” at the time of Suez Crisis
19
Q
What was the Beeching Report?
A
- reducing rail-route network and reconstructing railways
- 2,363 stations and 5,000 miles of railway line were marked for closure
- 55% of stations and 30% of route miles
20
Q
What did Macmillan apply for in 1961?
A
- membership of the EEC
- set up in 1957 (at the time Britain chose not to join)
- application was rejected
21
Q
How did employment change from 1955 to 1960?
A
- 1955: 200,000 were unemployed less than 1% of the workforce
- 1960: nearly 5 million people employed in service industries
22
Q
What was the impact of hire purchase, affluence and consumerism in the 1950s?
A
- more goods bought on hire purchase
- ITV launched in 1955
- 1957-59 households owning a television rose by 32%
- By 1960: 10 million televisions in use and 50% of population would watch it in the evening
- 56% of the population watched the Queen’s coronation in 1953
- in 1950s: 60,000 holidayed each week with Butlins
- foreign holidays less than 2% of the population enjoyed
