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British History > responding to economic challenges > Flashcards

responding to economic challenges Flashcards

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1
Q

reasons for the post-war boom between 1918-1920?

A

considerable saving from individuals and businesses during wartime rationing

increased consumer spending on luxuary goods

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2
Q

what was meant by the speculative boom?

A

large investment during the imediate post war period, to try and stimulate consumer spending.

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3
Q

in terms of the economy what occurred between 1920 - 1921?

A

recession, unemployment rose to 12%

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4
Q

how many workers were unemployed in 1921?

A

2 million

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5
Q

was the regional discrepancy?

A

yes, Tynside and Wales suffered from a decline in industry, where as the west midlands and the south didn’t suffer economic hardship to the same extent.

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6
Q

how much did the cost of living go up by during the earl 20’s?

A

25%

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7
Q

examples of resistance against crisis of failing industry?

A

hunger marches and strikes

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8
Q

what factors contributing in causing the recession ?

A
  • deflation: gov cut spending by 75% (1918-1920) and raised interest rates to 7% which drained money from the economy.
  • loss of export trade: financial competition e.g. Japan, and India began to dominate
  • under-investment: long-term under-investment of industry
  • industrial relation: deteriorated due to fears of strike
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9
Q

what did Lloyd George suggest as a solution to the recession in 1921 - 1924?

A

a policy of spending cuts known as “retrenchment”

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10
Q

what is meant by the Geddes Axe?

A

1921 Lloyd George appointed Sir Eric Geddes to cut public expenditure as he hoped this would stimulate the economy.

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11
Q

what did Geddes recommend ?

A

£87 million cuts in health and welfare between 1922 -23

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12
Q

what was suggested to be put in place to protecting trading and industry during the recession?

A

the implementation of tariffs to protect British industry and reduce unemployment LG didn’t believe in Tariffs and left.

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13
Q

how did Ramsay MacDonald do in terms of solving the economic crisis of the 20’s?

A
  • he failed to cut taxes and spending

- 1924 unmployment went down from 12% to 6.5% however began to rise again and inflation rose

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14
Q

what huge mistake was made under the leadership of Stanley Baldwin?

A

Winston Churchil the chancellor of the exchequer at the time reintroduced Britain to the gold standard which was catastrophic.

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15
Q

what happened to unemployment in 1930?

A

it rose to 2.5 million

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16
Q

what happened on October 29 1929?

A

there was a crash in the US stock market

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17
Q

why did Britain come out economically damaged initially after WW1?

A
  • government had not expected the war to go on as long as it did and need so much of the nations resources
  • America’s banks had loaned Britain large sums of money
  • Britain’s industry had been forced to switch from war production instead of supplying export markets.
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18
Q

what was some of the consequences of the wall street crash?

A
  • 66% contraction in global trade over the next five years

- Britains exports declined by 50%

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19
Q

what industries were badly effected by the wall street crash?

A
  • coal
  • dock work
  • cotton
  • iron and steel
  • ship building
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20
Q

how much did unemployment increase by between 1929 to 1930?

A

2.5 million

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21
Q

despite all of these unemployment problems, what was the governments main focus?

A

keeping the £ on the gold standard and supporting its value through spending cuts and high interest rates.

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22
Q

huge levels of unemployment and massive debts led to a debate between the labour government, what was Phillip Snowden suggest?

A

the chancellor of the exchequer Phillip Snowden believed that unemployment relief should come from taxing the wealthy and from corporate profits.

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23
Q

what did economist John Maynard Keynes suggest about managing unemployment?

A

government should increase spending on public works such as new roads, creating jobs.
- Snowden refused he knew that bankers in NYC and LDN were sick of paying out money.

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24
Q

what was the only area of industry that the government invested money in during the depression?

A
  • defence industry.
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25
Q

what rumours occurred during the summer 1931?

A

fears of an unbalanced budget - meaning the government had plans to spend more than they could afford.

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26
Q

what did fears of unbalanced budget lead to?

A
  • banks in America to engage in panic selling of the £ exchanging it for other currencies which lead to the pound slumping in value.
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27
Q

how did governments try to reassure financers that there money was safe

A

they proposed spending cuts, the main measure being the introduction of a 10% cut in unemployment assistance.
- this would keep the pound stable but caused hardship for may of Britain’s poorest.

28
Q

how did the national government respond to the depression?

A
  • implemented public spending cuts
  • primarially cutting sector workers pay by 10% and the means test for unemployment assistance
  • alongside the cuts they tried to give direct assistance through the special area’s act for the area’s most hard hit by the depression.
29
Q

what was the special area’s act ?

A

1934 the government introduced this act which identified; Tyneside, south Wales, west Cumberland and Scotland as regions in direct need of gov assistance.

  • however only a trickle of investment came to them
  • it was too little too late
30
Q

how much did real income rise by between 1932-1937?

A
  • 19%
31
Q

how much did industrial production rise by between 1932-1937 /

A
  • 46%
32
Q

GNP rose by how much between 1932-1937?

A
  • 23%
33
Q

how much did unemployment fall by between 1932-1937?

A

17% - 8.5%

34
Q

what did removing Britain from a the gold standard enable the governement to do?

A

a series of economic measures:

  • a cut in interest rates. making borrowing for businesses and individuals became cheaper which enabled more spending and job creation. people began investing money into housing which created a housing boom in the southeast and midlands.
  • they were able to allow a degree of inflation - they tried to stimulate spending and letting prices rise slightly.
  • devaluation of the pound made British exports cheaper and more competivie
  • banks became more willing to spend
35
Q

what specific ministries were developed during wartime to which took control of war production?

A
  • ministry of aircraft production
  • ministry of supply
  • ministry of war productions
  • ministry of food
  • ministry of labour and national service
36
Q

what was the most fundemental differences between Britiain during peace time and wartime?

A
  • government had the final say in war productions

- during peacetime its detirmined by businessess.

37
Q

what was Britiains war production like in 1939?

A

significant shortages in war equipment.

38
Q

what happened when Britain appeared to be loosing the war?

A 
1940 = increased gov intervention in war effort
1940 = Britain produced 15,000 aircrafts and in 1944  = 47,000
39
Q

who was a huge economic support for the UK ?

A

USA - even though they started off neutral. the 1939 American neutrality act - allowed the UK to buy supplies with cash only, however this money did run out.

40
Q

what did Winston Churchill agree with America after the cash ran out?

A

the agreed on a lend lease agreement making the UK to pay post war.
- USA Liberty ships provided coal, oil, food and was a lifeline during the war.

41
Q

what happened after the WW2 due to borrowed money from america.

A
  • accumulated dept of £4 million
  • UK economy has contracted by 1/4
  • relative economic position was declining
  • Britain was one of the biggest recipients for Marshall aid - in 1948 receiving £2.7 billion in loans
42
Q

what was the most important economic change during the post WW2 period?

A

nationalisation

43
Q

who was the advent for nationalisation?

A

1945 new labour

44
Q

what are some examples of nationalisation acts?

A
  • coal industry nationalisation act 1946
  • Bank of England act 1946
  • The Gas Act 1948
45
Q

when did the conservatives return to power?

A

1951

46
Q

what did the conservatives oppose?

A

nationalisation and wanted end war time rationaing

47
Q

what did the consensus lead to

A

commitment to full employment

mixed economy

48
Q

what was a key feature of the period 1954-1964?

A

growing consumer affluence and the ability to spend and borrow more money.

49
Q

what strategy did the government begin to employ in 1950-64?

A

“stop and go” economics which meant increasing IR when inflation was high and cutting them to boost and stimulate the economy
- they also relaxed the laws on borrowing and consumer credit.

50
Q

what did stop and go economics lead to?

A

exports becoming more expensive and received resentment from tax payers.

51
Q

what was Britain like in terms of relative economic performance 1957-64?

A

1960 = Japan achieved a growth of 12% and UK received a 4% growth in the same year

52
Q

what two organisations was set up in order to improve Britain’s relative economic performance?

A
  • NEDDY - national development council and office

- NICKY - national income commission.

53
Q

what was NEDDY?

A
  • an institution where management and unions could discuss the development of the economy and co-operate with each other.
  • was unable to enforce any legal control over either unions or industry gov hoped that both sides would come to a voluntary agreement together.
54
Q

what was NICKY?

A
  • during the 50’s a number of working days were lost due to striking
  • NICKY was an advisory council assembled from economists and industry experts
  • role was to give guidence to employers and unions on what the government considered to be reasonable pay rises
  • however it could not legally enforce any of the decisions.
55
Q

by 1964 the government were encountering serious economic problems including what?

A
  • unemployment 1963 grew to its highest level (878,000) since before the end of the war
  • increased consumer spending and increased demand for foreign goods and Britain experiencing a balance of payments problems causing a threat to the value of the £
  • August 1961 governemnt refused to devalue the pound so instead borrowed £714 million from the IMF in order to support it.
56
Q

when did Harold Wilson come into power/

A

1964

57
Q

what did Harold Wilson talk about making the economy?

A 
more egalitarian which would result in growth by allowing the most talented people irrespective of class to have opportunities
- he also believed the economy could be transformed by technology.
58
Q

what was the National board on income and prices?

A

was created to regulate pay settlements and was accompanied by a prices and incomes act 1966 which forced a statutory wage freeze for six months to curb inflations.

59
Q

what was the price and incomes act 1967?

A

allowed wage increase tin companies that could prove they were increasing productivity and output.

60
Q

what did wilson’s belief in technological improvement lead to the creation of?

A
  • the ministry of technologu in 1964 headed by Tony Benn from 1966 to guide and stimulate a major national effort to bring advanced technology and new processes into industry.
  • one of its main achievements was the creation of the supersonic passenger plan Concorde.
61
Q

what was the industrial reoganisation corporation ?

A

IRC promoted effecient practices in industry and offered loans to companies who wanted to implement new effeciency measures
- also promoted mergers between business as it was thought they could be more effecient through combining them.

62
Q

what was Wilson forced to admit in 1967?

A

that the devaluation the £ would help ease deep-seated problems in the economy and allowed the pound to be devalued.
- decrease of 14%

63
Q

what did Edward heath reject when he came to power?

A
  • corporatism and wanted to embrace free market ideas/

- he got rid of the IRC as he felt it was not up to businesses to regulate wage.

64
Q

what was the most significant economic problem faced by the labour government in 1974-79?

A

inflation by mid 70’s inflation was rising faster than wages.

65
Q

what happened to international banks confidence in the British economy during the mid-70’s?

A
  • decreased due to the rate of inflation and likelihood of further strikes
  • this caused the value of the £ to fall again.
  • British government were forced to accept an IMF loan which was agreed in September 1976.
66
Q

how much did the IMF loan Britain?

A
  • under £4 billion
  • came with conditions e.g. they had to prove they were capable of paying it back and therefore was forced to agree on £3 billion spending cuts.

British History (20 decks)

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