Thatcher - Economics Flashcards
What were some of Thatcher’s beliefs? (6)
- Conviction politics (Like me or hate me idc)
- Economic outlook (Despised dependency, high tax and unions)
- Believed that hard work should be rewarded, tax should be low and there should be more individualism and entrepreneurs
- The free market
- Didn’t like strikes nor marches as she thought they cut individuals rights
- Believed in nationalism
What was monetarism?
Thatcher wanted to control the economy by tackling inflation and price rises
How did thatcher implement monetarism?
- Taxation = cut basic rate from 33% to 30% and cut top rate from 83% to 60%. She doubled VAT which hurt the poor
- Spending cuts = cut from £11 billion to £9 billion between 1980-81
- Being a stubborn lil bitch = ‘the ladies not for turning’
How did thatcher deal with Nationalised industry?
- She was opposed to state owned industry as she believed the were in efficient and didn’t like that the gov should be used to keep failing industries afloat
- Appointed Sir Keith Joseph as Secretary of State for industry in 1979. He allowed some of Britain’s nationalised industries to decline. (Eg loss-making British steel made 53k workers redundant in 1979)
What was supply side economics?
Policy that designed to:
-Stimulate production of private sector = this involved tax cuts and breaking even (managed to get nationalised industries to break even at the expense of 95k jobs being lost in sectors such as steel between 1979-83)
AND
-Increase privatisation = Now that industries were making money they could be sold. BT, British Gas, Brit oil, Jaguar and BA were all sold off
What was Lawson Boom and Bust?
- Chancellor Nigel Lawson Hoped to keep the 1980’s boom going with a series of measures designed to continue curbing the state and setting the market free
- Economy grew at 4% a year between 85-88
- Thatcher appeared to be winning
- London was deregulated making share trading easier and introducing computer trading
- changed interest rates to tackle inflation
- October 1987 a bust in the economy. People borrowed money but couldn’t pay it back leading to a crash in the economy
How successful was Thatcher in dealing with inflation?
- Her prime goal
- Inflation rates 1979 = 13% but in 1980 they = 18%
- Low between 1983-89 and 1992-97 but still above EU average in all but 5 years
- low rates of inflation in some years could be seen as following UK trend and not down to thatcher
- MIXED
How successful was thatcher in growing the economy?
- Definite failure
- Grew at 4% in mid 80’s but remained at 2.5% on average
- Double that between 1974-83 but the same between 1960-97
- Failed to halt UK decline compared to rest of world
- 6th in GDP per head in 1950 but 11th in 1973 and 14th by 1997
How successful was thatcher in terms of unemployment?
- Definite failure but she did not try to tackle this issue on the most part
- peaked at 3.2million in 1985
- Fell from 1986 onwards, the averages were between 9.1% and 8.5% compared with 3.4% from 1974-79
- High unemployment rates
How successful was she in reducing the states role in the economy?
- Failure
- Wanted to reduce role but instead public expenditure as a % of GDP went up by 7%
- Privatisation and tax cuts suggested a reduction however there were increases in; social security payment (due to unemployment), law and order spending and military spending
How successful was thatcher in dealing with productivity issues?
- Limited success
- 1979 UK workers were half as productive as US workers
- By 1997 they were 77% as productive
- Improvement but still behind countries such as US, Japan, Germany and France
How successful was thatcher in dealing with industry and finance?
- Success for south, failure for North
- Financial services boomed in the 80’s which was great news for London and SE
- Decline in HI = high unemployment and poverty in the North
- Investment in financial services rose 300% compared to only 8% in manufacturing
- 1940 HI resulted in 40% of GDP by 1997 this had halved
- Manufacturing exports declined
- Balance of payments was negative
