Economy Flashcards
What were the key features of economy?
Mixed economy
Full employment
What is keynesian economics?
Government interference to keep demand high - stop another depression
When was the postwar boom/age of affluence?
1951-1964
When did food rationing end?
July 1954
In 1955 how many people were unemployed?
less than 1%
What sectors expanded between 1951-64?
Electrical and engineering
What was the 1955 giveaway budget?
Tax cuts of £134 million to the middle class
What was the april 1959 giveaway budget?
Tax cuts of £370 million to the middle class
In 1960 how many people were employed in the service industry?
5 million
What was the growth rate of the economy between 1963-1964?
4% to 6%
What caused run on the pound?
Suez crisis
What caused divisions in the cabinet between 1957-58?
Stop-go cycle
When did the pay pause come into effect and what did it cause?
1961 - caused application for an IMF loan
When did Britain apply to the EEC the first time?
1961
When was the National Economic development council set up and what was it’s job?
1961 - For long term economic planning
When was Britain rejected from the EEC?
1963
What was the Beeching report and when was it?
1963 - suggested railway cuts across the country
When were the labour government sterling crisises?
1965 and 1966
Who was the Chancellor of the exchequer for labour 1964-70?
Roy Jenkins
Why was Roy Jenkins a good chancellor of the exchequer?
- Raised taxes
- Tightened government spending
- Deflationary tactics
When did the labour government 1964-1970 achieve a balance of payments?
1969
What countries was Britain lagging behind in 1964?
Germany and Japan
What was the deficit the labour government inherited in 1964?
800 million
Why did the DEA fail in 1967?
There were conflicts with the treasury so could no longer carry out economic planning
Why were there strikes and a sterling crisis in 1966?
Due to prices and incomes policies
What affected the balance of payments 1967?
War in the Middle east
Dock strikes
How much was the pound devalued in 1967?
14%
When was the second EEC application rejected?
1967
What was the inflation rate 1969-1970?
12%
What cycle were the governments trapped in?
Stop-go
What did the government investments do 1973?
Modernised the industry
What was the unemployment rate 1970-74?
500,000
Who/what caused stagflation?
Anthony barber as he cut taxes
What is stagflation?
High inflation with high unemployment
What did the conservative government u-turn on in 1971?
- Said they wouldn’t give subsidies to lame-duck industries
- Nationalised Rolls Royce
What caused the 1973 stop of exports and rocketing oil prices?
Yom Kippur war and OPEC oil embargo
Why could the 1976 IMF loan be viewed as good?
Handled it well repaying it by may 1979
How many oil fields came into production by 1979?
9
What was inflation at during labour government’s time in power 1974-79?
10%
When did unemployment begin to fall again between 1974-79?
1978
In 1978 working days lost fell to what?
A ten year low
What did Healy’s budget of April 1975 do?
Created steep taxation and a decrease in public spending
What got called to question effectiveness in 1975?
National enterprise board
What was the National Enterprise Board?
Administer governments share in private enterprise and give financial aid
When was British Leyland nationalised?
1975
What did the social contract fail to do in 1975?
Limit wage demands
What did the failed social contract cause?
- More formal pay restraint
- Divisions within the labour party
What did the poor balance of payments cause in 1976?
- Pressure on sterling
- Concerns UK didn’t have enough currency reserves
When did the Uk receive and IMF loan?
December 1976
How much was the IMF loan?
3 billion
What did the government have to do in return for the IMF loan?
Make big spending cuts
What was unemployment at in 1978?
1.6 million
What were Thatcher’s main economic aims?
- Monetarism
- Deregulation
What happened in 1980 with the economy due to the effects of monetarism?
- plunged into recession
- inflation was above 15%
- unemployment above 2 million
How was the run of the pound avoided in 1980?
The flow of North sea oil and gas
How much did manufacturing fall in 2 years of Thatchers premiership?
15%
How much did the production in the west midlands fall by during Thatchers premiership?
25%
What was unemployment 1983-1985?
Above 3 million
What was the youth employment scheme?
Businesses were given a subsidy for taking on young people
How was taxation changed under Thatcher?
- From direct to indirect taxation through VAT
- The idea that people can spend their money better than the government can
How much did the top income tax fall by in 1988?
83% to 40%
What did VAT raise to in 1979?
15%
What did rate capping limit under Thatcher?
The amount local councils could tax people
What did privatisation signify?
The end of the post war consensus
When was BP privatised?
1979
When was British aerospace privatised?
1980
When was British telecome privatised?
1984
When was British gas privatised?
1986
Why was life more insecure for people under Thatcher when it came to their jobs?
Private companies cut back on staff so many people were losing their job
What was the loan guarantee scheme?
Easier for businesses to borrow money
What was the enterprise allowance scheme?
The unemployed were given £40 a week for up to a year to help them set up their own business
What happened in october 1986?
The Big Bang
What was the Big Bang?
It deregulated the London stock exchange
What was the yuppie class?
People living in urban areas with high amounts of disposable income
How much did GDP grow in the 1980s?
2.2%
Why did the economy grow so little in the 1980s?
Although the economy had started to increase by the second half of the decade, the damage was extensive from the first half
What was unemployment levels like in Liverpool under Thatcher?
25%
When did the stock market crash?
1987
Why did the stock market crash in 1987?
Due to deregulation
What was the lawson boom?
Rapid expansion of the economy
What did the lawson boom cause?
A balance of payments issue
What was inflation like in 1990?
10.9%
What was the benefits of leaving the ERM?
Didn’t have to keep inflation low anymore
What was unemployment like under John Major?
It stayed low
What happened to the housing market like under john major?
It began to pick up
Why did world trade expand under John Major?
America were also coming out of a recession
What were the economic positives in 1997?
- unemployment down
- productivity was up
- consumer spending was up
- car ownership was up
- house prices were up
What were the economic negatives at the end of 1990?
- declining manufacturing production
- rise in unemployment
- slump in house prices
How much did unemployment rise 1991/1992?
1.6 million to 2.6 million
What was the issues in housing in 1991/1992?
Mortgage value was higher than house prices
What were the government forced into in 1992?
High public spending and borrowing
When was black wednesday?
16th september 1992
What was black wednesday?
The government were forced to withdraw from the ERM
Why were the govenrment forced to withdraw from the ERM?
The pound collapsed
What was the ERM?
Exchange rate mechanism
What economic principles did Blair follow?
- keep inflation low
- keep government spending under control
- pro-business
- set ruleson government borrwoing
What economic image did the Blair government want to move away from?
The labour ‘tax and spend’
What did Blair want to do with the bank of england and why?
- Wanted to make it independent
- the government would make inflation targets but the bank would decide how to achieve this
What was ‘prudence with a purpose’?
Blair’s governments belief that having a growing and stable economy would improve public services
When did Blair’s government increase public spending?
2001
What did Blair’s increase in public spending cause?
- higher inflation rates
- 2.6% 1997
- 4.8% 2007
How did Blair finance more public spending?
Through public finance initatives
How did Blair bring in money?
- raising national insurance rates
- removing marriage tax allowance for couples under 65
- removing tax relief on mortgage payments
- reducing levels of tax-free savings
- sold off gold reserves
