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A-Level Modern Britain > Economy > Flashcards

Economy Flashcards

1
Q

1951-1964 - Conservatives

What dictated economic policy in this period?

A

The Post-War consensus

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2
Q

What were the key features of the Post-War consensus relating to the economy?

A
  • Belief in a mixed economy - mixture of private enterprise and state owned enterprise
  • Desire to have full employment
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3
Q

What did the Conservatives want to use alongside the Post-War consensus in their economic dealings?

A

Keynesian economic principles - government should intervene to ensure that there is demand in the economy - influenced by Great Depression and ensuing financial issues of the 1930s

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4
Q

Positive economic indicators

What ended in July 1954?

A

Food rationing

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5
Q

What milestone was achieved concerning employment levels in 1955?

A

Less than 1% of the workforce was unemployed

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6
Q

What industrial sectors saw huge expansion?

A

Electrical and engineering sectors

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7
Q

What industries began to provide more jobs?

A

Cars, steel and other metals

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8
Q

What was issued in 1955 that led to a feeling of affluence and growing consumerism?

A

1955 “Giveaway budget” which made £134m in tax cuts for middle classes

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9
Q

What had happened by the late 1950s concerning Britain’s import levels?

A

Britain was able to import 29% more goods than in 1951 - shows that world trade was improving

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10
Q

By late 1950s what did Britain enjoy?

A

A higher income per head than any other major country except the US

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11
Q

What happened in 1959 after the Suez crisis caused the “Run on the Pound” crisis?

A

The sterling regained its value against the dollar

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12
Q

What did the 1959 “Giveaway budget” provide?

A

Tax cuts of £370m

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13
Q

How many people were employed in the service industries by 1960?

A

Nearly 5m people were - 1/5 of working population

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14
Q

Between what dates was the British economy at its peak?

A

1960 and 1964

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15
Q

Can you provide a statistic to support this view that Britain’s economy was at its peak between 1960 and 1964?

A

Exports rose 10% between 1961 and 1964

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16
Q

Negative economic indicators

What happened following the Suez Crisis in 1956?

A

Run on the Pound - value of the pound crippled compared to the dollar

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17
Q

What did Britain remained stuck in in this period, especially in 1957 and 1958?

A

The “Stop-Go” cycle

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18
Q

What did Britain have low levels of between 1952 and 1959 compared to US and Western European countries?

A

Industrial production rates

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19
Q

What was introduced in 1961?

A

National pay pause

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20
Q

What did Britain do subsequently?

A

Applied for an IMF loan

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21
Q

What did the failure of EFTA and lack of British economic growth lead to Britain doing in 1961?

A

Applying to join the EEC

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22
Q

What was created to try and devise a long-term strategy for economic planning in Britain in 1961?

A

The National Economic Development Council (NEDC)

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23
Q

What other organisation was created to keep an eye on wages and prices in 1962?

A

The National Incomes Commission

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24
Q

What happened to Britain’s EEC application in 1963?

A

It was vetoed by Charles de Gaulle

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25
Q

Between 1961 and 1964 what percentage did imports remain higher than exports?

A

By 20%

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26
Q

1964-1970 - Labour

What did Labour continue to follow in their handlings of the economy?

A

The Post-War consensus

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27
Q

Positive economic indicators

What did the Labour government survive in 1965 and 1966?

A

The sterling crises

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28
Q

Who played an enormous role in stabilising the economy as Chancellor of the Exchequer in 1967 to 1970

A

Roy Jenkins

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29
Q

What did Jenkins do concerning the economy?

A

Raised taxes, tightened up government spending and implemented deflationary tactics

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30
Q

What was achieved concerning the balance of payments in 1969?

A

A balance of payments surplus was achieved

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31
Q

Negative economic indicators

What countries was Britain severely lacking behind in 1964?

A

West Germany and Japan

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32
Q

How much of a deficit did the Labour party inherit from the Conservatives in 1964?

A

£800 million

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33
Q

What was the cabinet divided over?

A

How to solve the economy - did not want to deflate or devalue as were worried about not meeting manifesto commitments and weakening Britain’s global position

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34
Q

What was set up to try and establish national economic planning? What happened to it?

A

The DEA - conflict with treasury led to it failing by 1967

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35
Q

What did the Prices and Incomes Policy of 1966 lead to?

A

National striking and a sterling crisis

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36
Q

What did the Middle East war and national dock strikes of 1967 do to the balance of payments?

A

It severally affected it

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37
Q

What was the government forced to do after the balance of payments was severely impacted?

A

Devalue the pound (for the purpose of increasing exports in global market) - value dropped by 14%

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38
Q

What happened to the second EEC application in 1967?

A

It was rejected - made only for economic reasons

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39
Q

At what rate was inflation running at in 1969 to 1970?

A

12%

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40
Q

What did Britain remain stuck in?

A

The ‘Stop-go” cycle

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41
Q

1970-1974 - Conservatives

Positive economic indicators

What seemed to be working by the government?

A

Their investments to modernise industry

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42
Q

By 1974 what had the unemployments rate fallen to?

A

500,000

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43
Q

Negative economic indicators

What did Anthony Barber’s (Chancellor of the Exchequer) attempts to encourage economic investment lead to in 1970?

A

Stagflation - high inflation accompanied by rising unemployment levels

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44
Q

By 1970, what were unemployment levels at?

A

1m

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45
Q

What famous event occurred in 1971?

A

The U-turn on stopping lame duck subsidies - Rolls Royce nationalised and money poured into Upper Clyde shipbuilders

46
Q

What did the Yom Kippur War and OPEC oil embargo lead to in Britain?

A

Stopping of exports, rocketing oil prices and long queues at petrol stations

47
Q

1974-1979 - Labour

Positive economic indicators

What did Callaghan handle well?

A

The 1976 IMF crisis and loan was repaid by May 1979

48
Q

By 1978 what was now accessible to Britain?

A

North Sea oil - Britain now had 9 oilfields in production

49
Q

What was falling by 1978?

A

Unemployment levels

50
Q

What did the inflation levels reduce to?

A

10%

51
Q

What had been achieved by 1978 which was monumental?

A

The days lost to industrial disputes had fallen to a 10 year low

52
Q

Negative economic indicators

What did Healy’s budgets of April 1975 impose?

A

A steep rise in taxation and cuts in public spending

53
Q

What enterprise was being questioned by 1975?

A

The National Enterprise Board used to administer government’s shares in private enterprise and give financial aid

54
Q

The nationalisation of what industry caused serious concern in 1975?

A

British Leyland

55
Q

What was becoming clear concerning the Social Contract by 1975?

A

It was failing to limit wage demands

56
Q

What was introduced as a result of the failure of the Social Contract?

A

A more formal pay restraint policy - caused party divisions to further intensify

57
Q

What did the poor balance of payments put pressure on by 1976?

A

The sterling and led to concerns that Britain did not have enough currency in reserve to support it

58
Q

In December 1976 what did the Government receive for making large spending cuts?

A

A £3bn IMF loan

59
Q

By 1978 what were the levels of unemployment at?

A

1.6m

60
Q

1979-1990 - Conservatives

What was Thatcher’s main economic aim?

A

To control inflation

61
Q

What was Thatcher’s main economic principles?

A
  • Monetarism (1979-1986) - economic theory that argued the best way for governments to control inflation was by restraining government spending and borrowing and curbing the amount of money in circulation
  • Privatisation (1979-1990) and Deregulation (1986-1990)
62
Q

Privatisation

What is the principle of privatisation?

A

Driven by the idea that individuals were better at spending money than governments; also that the private sector was more dynamic and efficient at delivering goods and services; belief that market competition encouraged improvements and innovation - also used to try and cut state costs of running services

63
Q

What industries were privatised in the period of 1979-1986?

A

BP 1979, British Aerospace 1980, British Telecom 1984 and British Gas 1986

64
Q

What happened to the number of individuals owning stocks and shares in the period of 1979-1990?

A

Increased from 3m to 9m

65
Q

What did this increase in the ownership of stocks and shares bring for the government?

A

A lot of revenue - critics thought that companies were sold off cheaply in order to ensure shares were all taken up

66
Q

What did privatised companies do?

A

Cut back on their staff and their pensions - made life more insecure

67
Q

What did the drive for privatisation signal?

A

The end of the post-war consensus for economic management

68
Q

Deregulation

What does deregulation involve?

A

Government limiting economic interference by removing excessive involvement to make it easier for businesses to trade and grow - loosening of controls on banks and markets

69
Q

Effects of Deregulation

What did the government introduce?

A

Measures to assist start-up companies

70
Q

What did the Loan Guarantee Scheme do?

A

Made it easier for businesses to borrow money

71
Q

What did the Enterprise Allowance Scheme do?

A

Encouraged unemployed to start their own companies by giving them £40 a week for up to a year

72
Q

What occurred in October 1986 concerning the London Stock Exchange?

A

It became deregulated which made London again the world financial centre - it could now compete with Wall Street

73
Q

What did deregulation create in British society?

A

The Yuppie class - abbreviation for young urban professional and used to describe people working in cities who had a large amount of dispensable income which was spent on consumer goods such as cars and early mobile phones

74
Q

What was the GDP growth in Britain in the 1980s?

A

2.2% overall - as second booming half of decade couldn’t overcome fully the first half

75
Q

What did economic realignment from manufacturing to service industries cause in Britain?

A

The north-south divide to sharpen

76
Q

What was the unemployment levels in Liverpool?

A

25%

77
Q

What did the economic realignment cause in the cities?

A

Urban decay, increase ill health, depression, alcoholism and drug addiction

78
Q

What were the 1981 riots in inner city areas fuelled by?

A

Poverty

79
Q

What happened to the stock market following deregulation in 1987?

A

It crashed

80
Q

What was the “Lawson Boom” of 1988?

A

The rapid expansion of the economy resulted in a balance of payments problem

81
Q

By 1990 what had inflation risen to?

A

10.9% - higher than it had been in 1980

82
Q

1990-1997 - Conservatives

What was the 1990s a tale of?

A

Two halves - 1990- September 1992 was negative and from September 1992-1997 was positive

83
Q

Negative economic indicators 1990-September 1992

By the end of 1990 what had happened to the manufacturing rate in Britain?

A

It was declining

84
Q

What had happened to interest rates in late 1990?

A

They had severely increased

85
Q

What had happened to the levels of unemployment towards the end of 1990?

A

A steep rise

86
Q

What had happened to house prices towards the end of 1990?

A

They had slumped

87
Q

What negative economic indicators occurred in 1991 to early 1992?

A

Unemployment rose from 1.6m to 2.6m; homeowners trapped in negative equity - mortgage values higher than current value of their home; homes were re-possessed - severely affected traditional Tory voters

88
Q

What was the government forced into in the early stages of 1992?

A

Government forced into high public spending especially on NHS and borrowing

89
Q

What huge event occurred on the 16th September 1992?

A

Black Wednesday - government forced to withdraw from Exchange Rate Mechanism due to collapsing value of the pound

90
Q

Positive economic indicators September 1992-1997

What was Britain no longer required to do after leaving the ERM?

A

No longer had to keep high interest rates and exchange rate floated down which helped exporters

91
Q

What happened to the levels of unemployment?

A

The decline slowed

92
Q

What happened to the housing market?

A

It picked up

93
Q

What did deregulation allow for in working practices?

A

Benefits and flexibility

94
Q

What happened to the world trade scene?

A

It expanded as America came out of recession at same time as Britain in second-half of 90s

95
Q

Who was Britain doing better than?

A

Germany who was struggling with the costs of reunification and sluggish growth rates

96
Q

By 1997 what had been achieved concerning the British economy?

A

Unemployment down; productivity up slightly; consumer spending up; car ownership up; houses prices up; businesses were supported by government policy and so supported Conservative economic policies

97
Q

1997-2007 - Labour

After the 1997 election which of Thatcher’s principles did Gordon Brown follow?

A

Keeping inflation low, keep government spending under control, be pro-business and setting rules on government borrowing

98
Q

What did Brown want to move away from?

A

Labour’s image as “tax and spend”

99
Q

What did Brown do to the Bank of England?

A

Made it independent of government - government would still set inflation targets but Bank would decide where to set interest rates to achieve this

100
Q

What did Brown call his policies?

A

“Prudence with a purpose” - having a growing and stable economy would help improve public services

101
Q

What happened to the amount of public spending from 2001?

A

Spending on public services sharply increased - particularly on new schools, new hospitals and pay rises for doctors, nurses and teachers

102
Q

What did the large spending lead to?

A

Inflation increasing from 2.6% in 1997 to 4.8% by 2007

103
Q

What were the Project Finance Initiatives (PFIs) used for?

A

Financing for public services were done through the PFIs

104
Q

What happened to the debts due to the large public spending?

A

They were stored for the future

105
Q

What did Brown also do severely?

A

Borrowed heavily from foreign banks - wasn’t an issue until the financial crisis loomed

106
Q

What did Brown also do to raise funds?

A

Taxed pension savings - led to a fall in value of £8bn by 2007

107
Q

In what other ways did Brown bring in money?

A
  • Raising National Insurance
  • Removing marriage tax allowance for couples under 65
  • Removing tax relief on mortgage payments
  • Reducing level of tax-free savings that could be earned each year in certain saving accounts called TESSAs and PEPs from £12,000 in 1999 to £7000 by 2007
108
Q

What did Brown do to Britain’s gold reserves?

A

He sold some of it when the price of gold fell between 1999 and 2002 - by 2005 gold prices had bounced back meaning Britain lost £3bn

109
Q

What had China done in the same period concerning gold?

A

China had bought gold and basically doubled their money when the prices bounced back

110
Q

How did life seem for consumers?

A

It seemed good - living standards were high, unemployment was low and people had money to spend

111
Q

What did critics warn?

A

That this consumer boom was not based on increased productivity in the economy but on rising house prices (which could have started to fall) and high levels of personal debt and credit card spending - this was the bubble that would burst in 2008

A-Level Modern Britain (4 decks)

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