Thatcher and the economy

Question 1

what was thatcher’s key beliefs concerning politics, rule of law, economic and nationalism>?

Answer 1

conviction politics ( which means sticking to ones principles) - ignoring consensus

aggainst dependecy, high taxes and gov intervention

viewed protests as a sign of lawlessness

was suspicious of black and feminist movements and believed british culture and values should be upheld.

Question 2

what is monetarism (1980-1982)

Answer 2

is is the political aim to keep inflation low

Question 3

what did Geoffrey Howe do to taxes?

Answer 3

lowered standard tax from 33 - 30%
lowered high rate tax from 83% - 40%
cut public spending from £11 billion in 1980 to £9 billion in 1981.
he increased VAT from 8% - 15%

Question 4

why is increasing VAT but lowering income tax worse for the poor?

Answer 4

progression form of taxation = larger proportion of their income.

Question 5

between 1980-1982 what was thatchers focus?

Answer 5

spending cuts which became more radical, for example she cut spending from £11 billion in 1980 - £9 billion in 1981.

Question 6

what areas did she cut spending in?

Answer 6

education, health and benefit

Question 7

during the early 80’s what did thatcher do to stop inflation.

Answer 7

raise taxes and cut spending - known as deflationary budgeting.

Question 8

why was the north sea oil crucial in thatchers policies?

Answer 8

it provided huge amount of revenue allowing thatcher pay for tax cuts and unemployment benefit. in 1983-85 it generated £41 billion in revenue.

Question 9

what is nationalised industry?

Answer 9

when government intervene with the market and invest money in supporting the business.

Question 10

why did thatcher not like nationalised industry?

Answer 10

because she was suspicious of them as they interfered with business growth and made no profit.

Question 11

who was appointed secretary of state for industry in 1979?

Answer 11

Sir Keith Joseph.

Question 12

what did Joseph implement?

Answer 12

he allowed some nationalised industries to decline and cut gov spending to support them. for example Brittish steel who in 1979 were forced to make 53,000 people redundant.

Question 13

why was the cutting in nationalised industries ironic?

Answer 13

because conservative spent more on providing redundancy pay for those without jobs that labour did the previous time supporting businesses.

Question 14

where did Sir Keith Joseph increase spending?

Answer 14

in car manufacturing.

Question 15

what did Thatcher give businesses to help encourage and stimulate growth?

Answer 15

timetables, leading to further redundancies in order to meet criteria. and reduce costs.

Question 16

what new economics policy to thatcher enforce during 1982-1987?

Answer 16

supply-side economics

Question 17

what is supply side economics?

Answer 17

it is a policy which argues that in order to stimulate production you need to increase privatisation and cut taxes.

Question 18

who was chancellor of the exchequer ?

Answer 18

Nigel Lawson, who cut taxes (standard rate.) from 30-27% in 1987.

Question 19

what was announced by Ian MacGregor in 1984?

Answer 19

the British coal industry was closing 74 pits making 64,000 coal miners redundant.

Question 20

why did thatcher want increased privatisation?

Answer 20

because she believed in increased industry and encouraged profit, also made it open for “ordinary people” to buy shares - campaign for British gas sale “tell Sid” to show how easy it was to buy shares.

Question 21

how many people owned share in 1979?

Answer 21

7%

Question 22

how many people owned shares in 1990

Answer 22

25%

Question 23

when did thatcher win her third election?

Answer 23

1987

Question 24

what occurred regarding the growth of the economy in thatchers third term?

Answer 24

the economy was growing by 4% each yeah, more prosperity amongst youth “yuppies” - young upwardly mobile professionals. increased youth in stock market.

Question 25

what was lawson’s deregulation policy?

Answer 25

began deregulating the city of London in 1986 which was the relaxation of credit controls, allowing people with lower incomes to borrow more money as well as decreasing interest rates from 14% in 1985 to 7.5% in 1988. he also deregulated financial market to encourgae foriegn investment `

Question 26

how did Lawson control inflation?

Answer 26

increase IR when inflation is high and cutting IR when inflation is low.

Question 27

what did lawson’s policies cause in the end?

Answer 27

Crash and bust - it led to a stock market crash on 17th october 1987 known as black monday, wiped out £50 million off the value of shares.

Question 28

how did lawson react to the stock market crash?

Answer 28

he introduced a series of measures including:
cutting IR
cut top rate tax from 60-40 %
cut standard rate tax from 27%-25%

Question 29

what did the deregulation policies cause?

Answer 29

high inflation and led the economy into a recession.

Question 30

what consequences did Thatchers economic policy have on inflation?

Answer 30

her prime goal was to control inflation, however her achievements were mixed.