Problems and Labour solutions to British economy 1945-70

Question 1

What were some of the economic problems in Britain? 1945-51

Answer 1

-American loans were gone
-Cost maintained for Army and international commitments
-Recurring financial problems (high debt, trade imbalance)

Question 2

How did Labour solve economic problems in Britain?

Answer 2

-‘Export or die’, increased exports and devalue pound to make it cheaper
-Negotiate Marshall aid, Britain receives £2.7billion from USA to rebuild
-Austerity

Question 3

What were the successes of Labour policies? 1945-51

Answer 3

-Full employment achieved (under 300,000 unemployed)
-World trade improved (Exports grew 80%)
-Economic growth (4% each year after 1948))

Question 4

What were the failures of Labour policies? 1945-51

Answer 4

-Modernise industry (investing in welfare rather than infrastructure was a mistake)
-Commitment to military spending and nuclear weapons forced government to adopt austerity policy

Question 5

What problems were there with consumer spending? (1950s)

Answer 5

-Increased consumer affluence and borrowing/spending more than ever before
-Spending has consequences with inflation
-Led to more imports, imbalance of payments

Question 6

How did Macmillan deal with the effects of consumer spending? (1950s)

Answer 6

• ‘Stop-go’ economics, government increased interest rates to slow down spending whenever inflation rose too much
  -Demonstrated failure of consistent long term strategies in the government