Responding to Economic Challenges 1918-39

Question 1

Post war boom 1918

Answer 1

Short lived post war boom ending in 1920

Followed by recession- falling demand through scarcity and high cost of goods

Question 2

Recession- unemployed?

Answer 2

2 million workers unemployed

Question 3

Recession- problems with traditional industries

Answer 3

Markets lost during the war- some countries eg India created own markets to meet demand

New competitions not involved in the war eg USA- more cost-efficient then uk industries

British industries =outdated and underinvested - less efficient eg Britain produced 86,000 tonnes of steel per year, USA produced 210,000 tonnes

Question 4

Attempts to solve economic problems- Geddes Axe

Answer 4

Eric Geddes appointed to implement cuts in public expenditure 1921

Recommended £87mill cuts in gov budget - majority in defence

Health, welfare and housing budget cut by £20 million

Question 5

Attempts to solve economic problems- return to gold standard

Answer 5

1924 chancellors of the exchequer Churchill returned Britain to the gold standard - to restore confidence in sterling

Overvalued by 10%- British exports made more expensive worsen balance of trade

Came off the gold standard in 1931

Question 6

Attempts to solve economic problem- May Report

Answer 6

1931 May committee predicted BoP deficit= £120mill by 1932

Proposed cuts in salaries of public sector workers and welfare benefits

Led to fall of 2nd labour administration

National gov imposed 10% cut in salaries and welfare

Led to fall in income reducing consumption worsening economic problems

Question 7

National government- careful reform

Answer 7

Limited economic spending eg measure such as the special areas act

Rearmament increased employment and helped improve economy

1934 prosperity returning esp in SE and Midlands due to growth of new industries eg car manufacturing