Political Developments: Initial budget impacts and Devaluation Flashcards
Who was Chancellor of the Exchequer in the early 1970’s?
Anthony Barber
What were 2 negative impacts of his initial budget? (1 about unemployment, one about inflation)
Unemployment rose to 900,000 Inflation rose to 15% by the end of 1971
What type of inflation occurred in the economy after Barbers initial budget?
Stagflation
Stagflation
When inflation increases but productivity does not
What did Heath decide to do after being 18 months in to this initial budget?
Political U-turn
When did Barber propose a new budget? What was it called?
Barber Boom budget, 1972
What 2 things did the Barber Boom Budget do?
£3.4 bil added to PSBR Prices and Incomes Board brought back
What was significant about the PSBR change in policies in Barbers new budget compared to the original 1970 manifesto?
Did not emphasise cuts in government spending
What did Barber say the 1972 budget would do?
Result in 10% growth within 2 years
What was a limitation of the 1972 budget? What did this result in?
Money was sourced by large scale borrowing resulting in inflation
What was the impact of the 1972 budget for employment? By what year?
By the end of 1973, only 500,000 were now unemployed
Why did Barbers budget bring back a prices and incomes policy?
To prevent inflation
How did lame duck industries benefit from the 1972 budget? 2 examples of funded lame duck industries?
They were funded again. Upper Clyde Shipbuilders Rolls-Royce
What did Barber do to the pound in 1972?
He devalued it
What percentage had the pound devalued by 18 months after Barber’s removal of fixed exchange rates in 1970?
Pound value dropped by 15% in 18 months, similar to the intentional 1967 Labour Devaluation
