Thachers Economic Policies

Question 1

What was monetarism?

Answer 1

Restrain government spending and borrowing.
Controlling the manly supply by making it more strict.

[in order to reduce inflation and increase economic growth ]

Question 2

What monetarist polices did thatcher government enforce?

Answer 2

• Budgets in the 1980s
-1979 budget
-1981 budget

• Taxation changes

• Rate capping

Question 3

What was the impact of the first budget of 1979?

Answer 3

1980 the economy had gone into recession

Inflation above 15%

Unemployment rose to 2 million

Which would’ve lead to a balance of payments crisis if not for a run on the pound for North Sea oil & gas

Question 4

What was the impact of the second budget (1981)?

Answer 4

Government borrowing decreased

local council grants were cut

Benefits were frozen

Question 5

What monetarist policies affected taxation?

Answer 5

-income tax fell from 83% to 50% by 1988

-standard rate fell from 33% to 25%

-VAT rose from 8% to 15% in (1979)

-taxes on petrol, cigarettes and alcohol increased by (1987)

Question 6

What was the impact of rate capping?

Answer 6

Limited amount of money council allowed to raise in local taxation

Controlled overseeing of labour local authorities, leading to rebels by local authorities (1985 by Liverpool).

Then In (1986) there was the abolishment of metropolitan local authorities

Question 7

What policies by Thacker were unmometerist?

Answer 7

There was a Rise in social security spending from high levels of unemployment

Question 8

What was privatisation?

Answer 8

Selling of publicly owned industries to private sector

Question 9

What policies had enforced privatisation by the thatcher government?

Answer 9

-(1979) privatisation of British aerospace
-(1984) sale of British telecom
-(1986) sale of British Gas

Question 10

What was the impact of privatisation?

Answer 10

Increase competition to encourage improvement and innovation

Private companies took on contracts to deliver goods

Increased government revenue

Increased job insecurity for business employees. As some jobs were lost as privatised enterprise cut staff back, less long term job security and reliable pension provision

(1979-1980) rise to 9 million stocks & shares owned by individual

Question 11

What is deregulation ?

Answer 11

Loosening control of banks and financial markets . Which meant less government interference

Question 12

What policies were there that enforced deregulation?

Answer 12

-Loan grantee scheme/LGS
-Enterprise allowance scheme/EAS
-(1986 ) October , deregulation of London stock exchange

Question 13

What was the impact of deregulation policies?

Answer 13

Easier for businesses to trade . Hence more entrepreneurial ship and wealth creation

LGS= easier for small business to borrow money

EAS= give £40 a week for year for unemployed to start business

-Rise in computer screening trade
-free competition
-foreign banks ac as stock brokers
-London became one of the main financial capitals of the world
-introduction of the yuppie: people working in cities with lots of disposable income

Question 14

How did thatchers attempt to control inflation and what was the impact?

Answer 14

Making high interest rates= economic recession, more expensive for businesses to borrow, increased value of pound, so exports are harder, making business go bankrupt . Increasing unemployment

May (1980) inflation was at 22%
By (1986) it was at 2.5%

Question 15

What was the impact of monetarist policies on unemployment ?

Answer 15

Caused industrial plants to close down. Meaning manufactural output fell by 15% in 2 years and steel production to be cut by 30%

In (1983) unemployment rose over 3 million (which had included 13.5% workforce)

[unemployment not felling bellow 3 million until 1987]

[Employment in Liverpool had only rose to 25% at its highest in the 1980s]

Question 16

What polices did thatcher government enforce to control unemployment? And impact?

Answer 16

-youth employment scheme: employers received subsidiary to take on young people
-employer national insurance rates reduced for lower paid jobs

Question 17

How did thatchers policies create economic realignment ?

Answer 17

-labour intrusive industries: dominant in (north, midlands, Scotland and wales) .Those focused on coal mines, shipyard and steel works faced challenge from foreign competition and technological innovation ,

Britains economy was becoming less revolved around manufacturing/ heavy industry and more about services. Which thatcher embraced

Which created , (and sharpened) a north and south divide

Question 18

What was the impact of economic realignment in the north?

Answer 18

-decay of urban city’s in those areas. Rise in Ill health & depression, rise in alcoholism and drugs

(1981) were riots in Buxton , handswith , Liverpool and Leeds

-more riots in (1985)

Question 19

What did the Scarment report say the (1981) riots were caused from?

Answer 19

From poverty and race in areas that had suffered highest unemployment & deprivation. As well as the implications of the ‘sus law’ that caused outrage

Question 20

What positive affects did economic realignment consequently do to some areas?

Answer 20

Created investment and regeneration in some areas

Micheal hesiltine pushed development projects in docklands & Liverpool

(Canary wharf became 2nd most important financial district in the uk)