Economy Flashcards
When was their full employment?
1955
Why was their a run on the pound in 1956?
Suez Crisis
What was MAcmillans eco. policy in 1957?
against monetarism (Thorneycroft)
–> he resigned with Enoch Powell
Why did Macmillan win the 1959 election through eco?
£370 million tax cuts
pound regained in value
When was the pay pause and the IMF loan?
1961
When were their balance of payment problems and solutions?
1962 - NICKY and NEDDY were set up to monitor wages and prices by Selywn Lloyd
WHen and what was the Beechinf Report?
1963 - closed 30% of all railways
Britian international poisition 1964?
lagging behind Japan and Germany
What was Labours eco. position in 1964?
inherited a £800 million deficit
options were to devalue ( party of devaluation) or deflate (stop go)
What was Devaluation and Deflation?
Deflation–> support pound and prevent inflation
Devalutaion–> imports expensive, home good cheaper, help balance of payments by lowering value of pound
What did George Brown set up to help economy in 1964?
DEA –> to help with wages
However it was competing with the Treasury to came to nothing
When was Brown moved to Foreign Affairs and end of DEA?
(1966) moved
(1967) ended
What replaced DEA?
prices and incomes policy to keep inflation down
Why was there a sterling crisis in 1965?
Caused by the seamen strikes
However Labour gov. survived it
What affected balance of payments in 1967?
War in Middle East affected oil supplies + major dock strike
Outcome of balance of payment problem in 1967?
gov. devalued + pound dropped by 14%
Defence cuts + higher interest rates
Post war consensus by 1970 economically?
questions whether state should take a greater role in planning economy and ensuring full employment
Why were Labour unlucky when they lost the 1970 election?
Balance of payment surplus and inflation still running at 12% –> economy was improving
Economy in 1971?
Anthony Barber (Chancellor)
tax cuts to encourage investment –> however led to stagflation
currency decimalised
What was the famous U-turn?
(1971-2) Unemployment reached 1 million had to retreat from free-enterprise eco. principles his gov. had tried to follow
Rolls Royce Nationalised
Money poured in to prevent Upper Clyde Shipbuilders going bankrupt
Affect of U turn?
Unemployement went down to 500,000
What happened in 1973?
Yom Kippur War led to oil price crisis and a subsquent energy crisis and wage increase from miners after strike
What did Labour inherit in 1974 economically?
Inflation at 15% and £3 billion balance of payment deficit
Who was Chancellor from 1974-6 and first steps?
Denis Healey –> 2 budgets, March and July 1974, to deal with eco. crisis without annoying unions
What did Denis Healey propose in his budget April 1975?
steep rises in taxation and public spedning was cut
What was set up to with the aim to increase investment and give financial aid?
(1974) national Enterprise Board (NEB)
What economic action in 1975 created renewed contrversy?
British Leyland nationalised –> rescuing lame duck industries
What did Conservatives inherit economically in 1976?
poor balance of payment put pressure on sterling
What speech did CAllaghan give in Sept 1976 to labour Party Conference?
‘cosy world’ gone
full employment gone
prep. for £3 billion IMF loan and need for spending cuts
Callaghans eco abilities?
dealt well with IMF crisis and eco. recovered
(1978) unemployment falling but still high and inflation at 10%
Public view on eco in 1976?
(Cons.) Nationally humiliating
reinforced image that Britian in eco. decline
What was Thatchers initial eco. policy?
Monetarism –> controlled money supply to reduce inflation
–> wets and dries
(1981) gov. borrowing went down
- benefits frozen
- grants to local councils cut
Examples of wets and dries?
Wets: Willie Whielaw (Home Secretary)
Jim Prior (employment minister)
Dries: more eco. posts
Geoffrey Howe (Chancellor)
Keith Joseph (Department of Industry)
Nigel Lawson
What was aim of monetarism?
Individuals spent moeny better that gov. did
–> shift away from direct taxation to indirect e.g. VAT
Economy in 1980?
Stagflation came back
overall monetarism
hit poorer people harder
(1986) Lawson abandoned spending cuts and monetarism ended by Thatchers second term
Interest in 1979, 1980, 1986, and 1990?
17%
22%
2.5%
10.7%
What was rate capping and when was it introduced?
(1981) control overspending and limit local tax
What were Thatchers 2nd and 3rd eco. policy?
Privitisation and deregulation
What was privitisation or (denationalisation) ?
Individuals spent money better than gov.; businesses would compete; brought revenue for gov.
signalled end of post war consensus
When did privitisation not work?
local gov under financial pressures
‘outsorucing’ –>private companies took contracts to deliver goods previously provided by state
life insecure for many employees: no long term job security or relaible pension provision
Examples of privitisation?
(1979) BP privatised
main push –> (1984) British Telecom privatised
(1986) British gas privatised
(1994) plans to privatise coal,
(1996) railways
What was deregulation?
Making it easier for businesses to trade and grow –? encouraging entrepreneurship
How did gov. encourage deregulation?
Loan Guarantee Scheme–> easier for small businesses to borrow money
Enterprise Allowance Scheme –> encouraged unemployed ti start their own businesses by giving £40 a week to get businesses of ground
What was the ‘big bang’?
(1986) deregulated London Stock exchange
–> became world financial centre
Britain economy 1980 overall?
London financial capital of the world + compete with Wall Street
Economy grew but productivity remained the same
–> 2.2% growth in GDP no better than 1970 Growth in second half of the decade balanced the underperformance of the first half
Thatchers eco. belief?
New RIght –> inflation was threat of the economy
Reversal of PWC where uneployment was avoided
Issues with high interest rates (1979-1980)?
more expensive for businesses to borrow
incr. value of pound –> difficult for businesses to export
Economy went into recession, businesses going bankrupt, led to high unemployment
What happened with interest rates in 1986?
Dropping very low, attempts to control inflation led to further recession and eventual entry to ERM
By 1990 it then reached double figures again
Unemployment in 1983?
rose to 3 million (didnt fall below till 1987)
How was high unemployment in 1983 tackled?
Yotuh Employment Schemes –> employers received subsidy to take young people on
Gov. remained firm that inflation more important than unemployment
How was North and South divide worsened?
Britians eco. moving away from heavy industry and instead based on services
(1981) series of riots
(1981) Scarman Report found cause was poverty and race
–> high unemployment and deprivation
What was aim of the poll tax in 1990?
make local councils more accountable to their electors by ensuring everyone contributed
Negatives to poll tax?
poor pensioner would pay the same as a millionaire
Affect of poll tax?
Anti-poll Tax unions set up urging people not to pay
(march 1990) anti-poll tax dem. in Trafalgur Square with more than 200,000 people
–> led to riot and 5000 people injured (some police and innocent bystanders)
–> 300 arrests made
–> police lost control
–> criticism of politicisation of the police
Economy from 1991-2?
rose from 1.6 million to 2.6 million
homeowners in neative equity
homes repossessed
What did Major do before the election in 1992?
resorted to high public spending
–> spending forced as a result of risinf unemployment
When and what was ERM?
(1990) joined to maintain fixed rate of exchange with narrow fluctuations
What was Balck Wednesday?
(1992) left ERM
–» British currency under pressure and kept decreasing
–> postivie eco. improv. but negative political
–> unemployment rate slowed
–> housing market picked up
–> car ownership incr.
When was poll tax abandoned and affect?
(1991) was £1.5 billion wasted
What did Major inro. economically?
PFI (Private Finance Initiative)
public-private partnerships
private companies fund infrastructure improvements then deliver public services
Who was chancellor from 1997-2007?
Gordon Brown control over eco. policy
How did Brown help pay for work?
Intro. tax credits
–> benefits paid to people with low incomes with specific elements targeted at e.g. disability or those with children
What did Labour inherit in 1997 economically?
favourable eco. circumstances
What were Lab priorities in 1997 and why?
Keep inflation low, gov. spending under control, appearance of pro-business
–> to escape iamge as a ‘tax and spend’ party
Browns policy with Bank of ENg.?
made independent from gov.
–> could decide where to set interest rates to match gov. chosen inflation
What did Brown do with Tresasury?
set rules about how mcuh could be borrowed by gov.
–> following Thatcherite belier supply of money need to be controlled
Purpose of the treasury?
imporve public services
–> investment in new schools and pay rise for doctors and teachers
–> funding necessary after neglect from cons. 1979-97
How did Lab. avoid raising taxes?
Like Cons. used private sources of funding to improve public servies
–> criticism: funding from PFI (prive Fiance Initiative) led to debts stored in future
Eco. by 2007?
Brown unprecendented 10yrs as chancellor
- inflation under control
- record number in wrok
- living standards high
- consumer eco. boomed
What was Economist view by 2007?
consumer boom based on rising house prices and high levels of credit card spending + personal debt than incr. productivity
–> danger ‘bubble’ might not last
