Thatcher's economy

Question 1

when did thatcher first get elected?

Answer 1

1979

Question 2

was thatchers election in 1979 a turning point in the post war consensus?

Answer 2

yes
-as compared to the last election the conservatives had now won by a landslide of 339 seats compared to labour 269. james callaghan was the labour pm before thatcher 1976-1979
no
-industrial areas still voting labour

Question 3

name the 4 components of the post war consensus

Answer 3

• full employment
• mixed economy
• co operation with trade unions
• commitment to welfare state

Question 4

what years was thatcher pm?

Answer 4

1979-1990

Question 5

where did Thatcher’s ideas come from?

Answer 5

her own instincts and experience:
-Thatcherism was a mixture of traditional conservative thinking, the ideas of tory intellectuals and her own social and political instincts

new right thinking:
-she was also influenced by new right ‘think tanks’. they challenged Keynesian ideas and drew on the ideas of Milton Friedman and Friedrich Von Hayek

Question 6

what is monetarism?

Answer 6

an economic theory which argued the focus should be on controlling inflation

Question 7

what were the main elements of Thatcherite economic policy?

Answer 7

• monetarism
• low taxation
• privatisation
• control of trade unions
• deregulation of business
• low inflation

Question 8

what was the best way for the government to control inflation?

Answer 8

• through restricting government spending and borrowing
• by placing strict controls on money supply / the amount of money in circulation

Question 9

describe the change in Thatcher’s economic strategy from 1979 to 1983

Answer 9

1979-1983: she had Geoffrey Howe as her chancellor and pursued a monetarist agenda

1983 onwards: she had Nigel Lawson as her chancellor and her priority changed to supply side economics

Question 10

define populist

Answer 10

a politician who strives to appeal to ordinary people who feel as though their concerns are ignored by established elite groups

e.g. Margaret Thatcher and her conservative government

Question 11

what did Thatcher’s populist instincts tell her that many middle class and skilled working class people were feeling towards trade unions?

Answer 11

that m/c and skilled w/c voters were angry with the power of the trade unions and wanted to see their ‘old fashioned’ values of hard work, sobriety and thrift (using money and other resources carefully and not wastefully) rewarded.

Question 12

what did Thatcher’s budget in 1979 set out to do?

Answer 12

monetarism:
- reduce government spending (which they believed would reduce inflation and lead to economic growth)
- restrict the amount of money in circulation
- reduce public expenditure

Question 13

what happened in 1981 that caused the 1979 Thatcher Budget to fail?

Answer 13

• in 1981 there were falling orders for manufactured goods
• the economy plunged into a serious recession with inflation above 15% and rising unemployment
• the only save for the British economy was north sea oil and gas which had started to flow

Question 14

describe the 1981 budget and its impact

Answer 14

• grants to local councils were cut
• benefits frozen
• the chancellor Geoffrey Howe called it ‘the most unpopular budget in history’
• the impact was severe with the fall in manufacturing even steeper than in the great depression of 1929-1931

Question 15

what did many people expect the conservative government to do after the 1979 budget fail?

Answer 15

• following the recession many people expected the government to reverse its monetarist economic policy but at the 1981 budget, even further monetarist policies were applied

Question 16

the thatcher era saw a change in the nature of unemployment, describe the decline in industrial worker

Answer 16

1970= 9 million
1980= 7 million
1990= 4 million

Question 17

what percentage did the wages of workers in Britain rise by between 1979-1994? what is this in comparison to America?

Answer 17

26%

compared to America where wages dropped by 7%

Question 18

why did the wages of workers rise between 1979 and 1994?

Answer 18

• this was caused by the growth of the number of small businesses
• the number of self employed had grown from 1.9m to 3.5m between 1979-1989

Question 19

because the goal was lowering inflation, what was no longer a priority?

Answer 19

maintaining low levels of unemployment

Question 20

where were the worst hit areas of unemployment?

Answer 20

the midlands
the north
central scotland
south wales
‘often referred to as the deindustrialisation of Britain’

Question 21

what was the figure of unemployment in 1983?

Answer 21

3 million
the highest of the post war period

Question 22

when did unemployment fall below 3 million, after reaching it in 1983?

Answer 22

1987

Question 23

what was the percentage of unemployment in liverpool?

Answer 23

25%

Question 24

why was there so much unemployment in britain?

Answer 24

workers traditional skills were no longer needed as they had been replaced by mechanisation and flexible working practices

Question 25

what funded the unemployment benefits payment that was required due to the recession?

Answer 25

many say
-the economic growth
or
- north sea oil bringing billions of pounds into the treasury

Question 26

what was the percentage of the workforce being unemployed from apr-jun in 1979 compared to 1986 and 1990?

Answer 26

1979= 5.3%
1984= 11.9%
1990= 6.9%

Question 27

how did the government try to curb inflation?

Answer 27

-they used interest rates which were raised to 17% in 1979. this made it more expensive for businesses to borrow money
-they increased the value of the pound. this made British exports more expensive

Question 28

what was the impact of the governments strategies to try and curb inflation?

Answer 28

-the economy went into recession with many businesses going bankrupt leading to high unemployment.

-inflation rising

Question 29

as inflation continued to rise what did it peak at and reach a low of ?

Answer 29

-inflation peaked at 22% in 1980
-it then fell to 2.5% in 1986
-by 1990 it had again reached double figures at 10.9%

Question 30

what happened to monetarism in 1983?

Answer 30

the popularity of monetarism was in decline by 1983 and from the mid 1980’s it was abandoned

Question 31

what was the state of the economy in 1981?

Answer 31

• deep recession
• unemployment rates= 60%
  inflation= 22%

Question 32

what helped thatcher economically?

Answer 32

north sea oil bringing in £8b a year

Question 33

what was the result of the 1983 election?

Answer 33

thatcher won by a landslide

Question 34

what evidence was there of growing inequality?

Answer 34

• rich were getting richer
• bottom 10% of countries income fell
• poll tax, lollipop ladies paying an extra thousand pounds a year

Question 35

give a privitisation stat

Answer 35

the number of people who owned shares rose from 3m to 9m between 1979-1990