How Effectively was the Economy Managed, 1951-70? Flashcards
Churchill (Cons), 1951-55- Continuity
Churchill 77, little part in gov, mainly Chancellor, R.A. Butler
Remained committed to mixed economy, welfare state + using gov. spending to stimulate growth
In ‘Industrial Charter’, broadly accepted mixed economy, took corporatist approach to unions
Butskellism- similar to Labour
Churchill (Cons), 1951-55- Change
Labour favoured high taxation, Butler cut income tax twice- 1953 + 55 budget
Labour used tax increases as deflationary measures, Cons used interest rates
De-nationalised Iron and Steel + broke up British Road Services authority by 1953
Churchill (Cons), 1951-55- Unemployment
Stayed low, around 300,000- no return to harsh gov cuts + mas unemployment of 1930s
Churchill (Cons), 1951-55- Analysis
Followed Keynesian principles
Cooperated with unions
Continued welfare expansion
Consensus continued
Unemployment remained low
Consensus politics avoided extremes + dramatic political shifts- stability
MacMillan (Cons), 1957-63- Economic Aims
‘One-nation’ Tory, believed in ‘Middle Way’- between trad Cons and Lab economic policy
Man of consensus, pursued economic policies broadly in line with Lab- mixed economy + loose Keynesianism
MacMillan (Cons), 1957-63- Stop-Go Economics (Go)
1950s- ‘never had it so good’
Encouraged spending by relaxing laws in consumer credit + borrowing, and cutting interest rates- ‘cheap money’ policy
1959- ‘giveaway budget’, Chancellor Amory- range of tax cuts. Criticised- ‘budget politics’
MacMillan (Cons), 1957-63- Stop-Go Economics (Stop)
Consumer boom led to inflation + influx of imports- balance of payments problem
Gov attempted to ‘slow the economy’ by raising interest rates + taxes, resentment from taxpayers
MacMillan (Cons), 1957-63- Stop-Go Economics (Budget Politics)
1964, year of election, cut interest rates + taxes again
Consumer boom, increase in imports + balance of payments at £800m
‘Short-termist’, no consistent growth, no consistent policy
MacMillan (Cons), 1957-63- Economic Growth
Standard of living rising, but economy not keeping pace with competitors
1960- Japan had 12% growth, Britain had 2.3%
MacMillan (Cons), 1957-63- Main Problems in 1964 (Unemployment)
Unemployment at 380,000 in 1957, grown to 878,000 by 1964- highest post-war level
MacMillan (Cons), 1957-63- Main Problems in 1964 (Balance of Payments)
‘Cheap money’ encouraged spending, but increased demand for foreign goods led to balance of payments problem
Determined not to devalue £, so borrowed £714 million from IMF in April 1961, added to debt + didn’t help exports
MacMillan (Cons), 1957-63- Analysis
Continuing the consensus
Tax cuts for popularity
Encouraged consumer spending
Then discouraged- ‘stop-go’’
Overall, economic policies short- termist + failed to produce suitable economic growth
Weak compared to other nations
MacMillan (Cons), 1957-63- Main Problems in 1964 (Stagflation)
Facing stagflation (rising inflation, slow economic growth)
Seen as the ‘sick man of Europe’
Fallen behind Western Europe economic growth (UK-2.3%, Germany-5.1%, France-4.3%)
Trade continued to struggle
Wilson (Labour), 1964-70- Main Economic Problems (Economy Issues)
Britain ‘sick man of Europe’
Deficit of £800 million- defence spending, balance of payments, rising costs of social welfare (5% of GDP)
Wilson (Labour), 1964-70- Main Economic Problems (Trade Unions)
Growing union activity- more demanding + militant
Number of strikes at 2,251 in 1964, involving over 1 million workers
Regular pay rises as a result- dramatically increasing inflation
