Economy 1951-64

Question 1

Why was the 1951-64 Conservative govt fortunate?

Answer 1

They came into power in 1951, just as the effects of postwar recovery began to show.

Question 2

How much did the population increase between 1951 and 1961 (the baby boom)?

Answer 2

5%

Question 3

By 1955 how many people were unemployed?

Answer 3

Only 200,000

Question 4

What did Butler do just before the 1955 election?

Answer 4

As Chancellor, he announced a ‘giveaway budget’ including £134m in tax cuts.

Question 5

What was the main underlying problem with the British economy?

Answer 5

Productivity. British workers in 1960s were about 25% more productive than in 1950 but this was much less than France and W. Germany.

Question 6

How did UK’s share of world markets change from 1950 to 1962?

Answer 6

Decreased from 25% to 15%.

West Germany increased from 7% to 20%.

Question 7

What were the stages of the ‘stop-go cycle’?

Answer 7

• STOP: High interest rates, wage freezes
• Demand falls
• Output decreases
• GO: controls removed
• Demand rises
• Increased imports
• Balance of payments deficit

(cycle repeats)

Question 8

Who was Macmillan’s chancellor?

Answer 8

Peter Thorneycroft.

He believed in ‘monetarism’ and wanted spending and tax cuts. Cabinet divided over this in Summer 1957. Eventually, Macmillan refused to support spending cuts and Thorneycroft resigned over it.

Question 9

When did Britain first apply to join the EEC?

Answer 9

1961

Question 10

What were the main challenges faced by the British economy during the period between 1951-1964?

Answer 10

• British companies were not meeting the demand on domestic market
• As the government tried to maintain high value of pound, British products were more expensive than those from other countries
• Most money was invested abroad because people did want to risk investing in Britain with constantly changing interest rates
• No long term investment or improvement was made in Britain
• Negative balance of trade.

Question 11

Define term balance of trade.

Answer 11

The difference between countries’ imports and exports.

Question 12

What were the main downsides of using stop-go policies for British economy?

Answer 12

• It offered no long-term economic strategy
• It caused stagflation (stagnation and inflation at the same time)
• Discouraged long term investment due to volatility of interest rates.

Question 13

How much was the overall wage rise within the period of 1951 to 1964?

Answer 13

For the average male worker increase was from £8.30 in 1951 to £18.35 in 1964.

Question 14

What was the main criticism of implementing go phase during years 1958 and 1959?

Answer 14

• Growing demands for products led to higher wages demands, met by government, and this led to inflation.
• Thorneycroft wanted to implement stop phase but was overridden due to upcoming elections. He resigned in January 1958.

Question 15

Define term stagflation.

Answer 15

A combination of inflation and stagnation at the same time. The industry is in decline and yet there is growing inflation creating worst of both worlds.

Question 16

What was the percentage of yearly government spend on defence under Conservative government?

Answer 16

10%

Question 17

In what year did the rationing end in Britain?

Answer 17

1954

Question 18

Why was Britain in 1950s sometimes described as property owning democracy?

Answer 18

A society in which as many people as possible are encouraged to buy property; a principle that owning a property is an essential part of democracy.

Question 19

What were the two main aims for the Keynesian economic policies?

Answer 19

The government should use its budget to:
- invest in the economy
- provide full employment.

(Budget deficit in this scenario was not a problem.)

Question 20

What year saw highest unemployment during the period of 1951 to 1964?

Answer 20

1963, with 878,000 people.

Question 21

What year saw the lowest unemployment during the period of 1951 to 1964?

Answer 21

1956 with 297,000.

Question 22

What evidence suggests that there was period of genuine affluence in British society in the period 1951 to 1964?

Answer 22

• There was a rise in real wages (they rose 72% from 1951 to 1963) and availability of credit, meaning that people could afford more than ever before
• Number of cars rose from under 3 million to 7 million within the period
• TV sets rose from from 340,000 to 13 million.
• Working week was reduced from 48 hours to 42.
• Quality and access to housing hugely improved during the period and most people had access to central heating, hot water and indoor toilet.

Question 23

What evidence suggests there were limits to affluence during the period 1951 to 1964?

Answer 23

• There was a significant rise in unemployment towards the end of the period
• Most of the goods were bought using hire purchase calling to question the actual purchasing power of middle and working classes.
• The government wanted to avoid strikes and so it gave in to trade unions wage demands meaning the unions became increasingly powerful.

Question 24

What are the main criticisms of Macmillan’s economic policies?

Answer 24

The policies were mainly focused on improving standard of living rather that creating economic growth and rise in production, therefore did not resolve some of the key issues experienced by British economy, for example GDP in Britain rose only by 2.3% from 1951 to 1964 whereas in France it rose by 4.3%, in Germany 5.1%.

Question 25

What is deflation?

Answer 25

Deflation is a process where prices of consumer goods and services fall and money increases in value. Longer periods of deflation can lead to higher unemployment, a decrease in demand, and a reduction in economic activity.

Question 26

Which industry was especially growing during the period of 1951 to 1964?

Answer 26

Services industry.

Question 27

How much did Rab Butler cut the taxes in his ‘give away’ budget of 1955?

Answer 27

• 2.5p of standard rate
• 1p of lower rates
• This translated into £145m of tax cuts.

Question 28

How much did the Tories cut tax by before the 1959 election?

Answer 28

£370 million

Question 29

What happened to average productivity of the British workers in comparison to German workers?

Answer 29

British worker’s productivity rose by 25% whereas German workers productivity rose by 59% by 1960.

Question 30

What were the two fastest growing economies within the period 1951 to 1964?

Answer 30

West Germany and Japan.

Question 31

Define the term “run on the pound”.

Answer 31

A rapid fall in the value of the pound in international currency markets, especially in relation to US dollar.

A situation where investors and traders quickly begin to sell their assets to limit losses, causing the price of the pound to decline rapidly.

Question 32

Give an example of when a run on the pound took place between 1951 to 1964.

Answer 32

1957 following Suez Crisis.

Question 33

When did the British government have to ask for the first loan from monetary fund?

Answer 33

1961. Govt had to introduce pay pause to avoid rise in inflation.

Question 34

What was Beeching Report (1963) and what did it cause?

Answer 34

It was a report into a programme of cutting public spending, it led to reduction in British railways by 30%, closing many smaller stations and living some rural areas isolated.

Question 35

When did festival of Britain take place?

Answer 35

It took place in 1951 and it was designed to mark British recovery from war, and show off developments in design, industry and culture.

Question 36

What year did ITV launch?

Answer 36

1955

Question 37

How much did real wages rise by (1951-64)?

Answer 37

20%

Question 38

How many tax cuts were there between 1951 and 1964?

Answer 38

5

Question 39

How big were the tax cuts in the two giveaway budgets 1951-64?

Answer 39

1955 budget: £134m
1959 budget: £370m