Economy 1951-79 Flashcards
What was the post-war consensus? (4)
- Belief in a mixed economy
- Desire for full employment
- Support of the welfare
state - Apply Keynesian economics (Government intervention to ensure economic demand)
Who was in Government from 1951-64?
The Conservative party
Name 3 positive economic indicators from 1951-64
- Post war boom and age of affluence
- 1955: less than 1% of the workforce are unemployed
- Expansion of engineering and electrical sectors
Why was the increase in the Engineering and Electrical sectors good for the economy? (2)
- More jobs
2. more cars, steel and other metals were available
How much money was given away in the form of tax cuts in 1955?
£134 Million
Why did the tax cuts of 1955 help the economy?
more money in peoples pockets encouraged spending
How many more imported goods could Britain provide in the late 1950s compared to 1951?
29%
What was the effect of increased import goods in the late 1950s?
British people had the highest income on average in any major country aside from the U.S.
How much money did the “Giveaway budget” of April 1959 provide
£370 million of tax cuts
How much did the British economy grow from 1960-1964?
From 4% in 1963 to nearly 6% in 1964
How much did exports grow between 1961-64?
10%
Name 4 negative economic indicators from 1951-64
- Run on the pound from the Suez crisis
- Britain was trapped in the “Stop-go” cycle. This led to major cabinet divisions, predominantly in 1957-58
- 1961: “Pay pause” and IMF loan application
- 1952-59: UK had weak industrial production rates compared to the US and Western European nations
I) What year did Britain apply for the EEC?
II) Why did they apply?
III) What was the result?
I) 1961
II) Slow economic
development compared to the UK
III) The application was rejected in 1963
I) When was the National Economic Development Council created?
II) Why?
I) 1961
II) They were tasked with creating a safe, long-term economic plan
I) When was the Beeching report published?
II) What did it do?
I) 1963
II) Reviewed public
expenditure and recommended massive cuts on the railway network
From 1961-64, how much higher were imports than exports?
20%
How did men’s weekly wage change from 1951-61?
It increased from £8.30 to £15.35
What brought inflation in the years 1951-64?
Wage growth was higher than the rate of production
Name 4 aspects of the Age of Affluence
1) Pre-war slums replaced with new towns (Harlow, Essex etc)
2) Massive increase to private savings in 1952
3) Home ownership increased due to access to cheaper mortgages
4) surge in ownership of
consumer goods
Between 1957-59, how much did the ownership in TVs rise?
32%
I) How much did car ownership rise between 1957-1959?
II) What did this lead to?
I) 25%
II) An increased desire for new roads and motorways
When did the construction of the motorway system begin?
1958
I) In the 1950’s, how many people holidayed each week with Butlins?
II) Why?
I) 60,000 people
II) Increased wages and payed time off
Who was in power from 1964-70?
Labour
Name 3 positive economic indicators from 1964-70
1) Government survived the sterling crises of 1965-66
2) Roy Jenkins was a successful Chancellor of the exchequer from 1967-70
3. 1969: balance of payments surplus achieved
What indicated that Roy Jenkins was a successful chancellor of the exchequer? (3)
I) Raised taxes
II) Tightened up government spending
III) Deflationary tactic
Name 4 negative economic indicators from 1964-1970?
1) 1964: Inherited deficit of 800M
2) DEA was set up to try and establish national economic planning, but failed
3) Stuck in the stop-go cycle
4) 1969-70: Inflation still running at 12%
I) Why did the DEA fail?
II) When was it shut down?
I) Conflicts with the Treasury regarding the sharing of documents and the
II) 1967
What was the consequence of the Middle East War and the national dock strike?
Affected balance of payments, and the government was forced to devalue the pound by 14%
When was the second EEC application rejected?
1967
What did the government do to disincentivize spending during a balance of payments deficit? (2)
1) Freeze wages
2) increase the interest rates to make borrowing less attractive. This also encouraged saving and investing, which would boost the economy
Who was in government from 1970-74?
Conservatives
Name one positive economic indicator from 1970-74
1973: government investments to modernise industry seemed to be working
What was the effect of government investment in industry in 1973?
Unemployment fell to 500,000
What were the consequences of the Yom Kippur War and OPEC oil embargo in October 1973? (3)
1) Increased oil prices and long queues at petrol stations
2) led to the stopping of exports
3) Strengthened the miners hand when they demanded a huge pay rise in November 1973
Who was in power from 1974-79?
Labour
Give 4 positive economic indicators from 1974-79
1) Callaghan handled the 1976 IMF loan well
2) Inflation fell to 10%
3) Unemployment falling by 1978
4) By 1978, days lost to industrial disputes had fallen to a 10 year low
When was the IMF loan repaid by?
May 1979
Give 3 negative economic indicators from 1974-79
1) Healy’s April 1975 budget caused steep rise in taxation and cuts in public spending
2) December 1976: £3bn IMF loan in return for making spending cuts
3) Unemployment was at 1.6m by 1978
What was the Social Contract?
An agreement between the British Government and the Trade Union Congress (TUC) where the government agreed to adopt economic and social policies favoured by the trade unions in exchange for voluntary wage control
In 1975, what was the result of the Social Contract failing to limit wage demands?
Led to the introduction of a more formal pay restraint policy which caused party divisions to intensify further
What problems did the poor balance of payments cause in 1976?
Put pressure on the sterling and led to concerns Britain did not have enough currency in reserve to support it
What was the National Incomes Commission set up for in 1962?
To keep an eye on wages and prices
What US policy had a big impact on the British economy?
The Martial Plan
What was the balance of payments deficit by 1961?
£95 Million
What caused the balance of payments deficite?
The was more product being Imported than Exported?
What is it called when prices continue to grow when the economy doesn’t?
Stagflation
I) What was British debt in 1957?
II) What had that increased to by 1964?
I) £540 Million
II) £800 Million
What was MacMillan’s famous quote about the economy in 1957?
“The British public had never had it so good”
I) What was the state of Unemployment in 1957?
II) Was this Stable?
I) It was low, which was seen as a key pillar of the governments effectiveness
II) No. It was continually going up
Which party supported Stop-Go economics?
Conservative
What action in 1957 shows the dangers of Stop-Go
MacMillan’s entire treasury resigned over it
When was the Pay Pause in the public sector?
1961
I) How many people were unemployed by 1963?
II) How did the government combat this?
I) 800,000
II) Reginald Maudling introduced a free spending budget
I) What were the actions taken in the 1963 free spending budget?
II) What was the positive impact of this?
III) What was the negative impact of this?
I) Reduced interest rates and cut taxes
II) Unemployment fell by 300,000 (to 500,000) in 1964
III) The balance of payments deficite increased to £800 Million
