The Changing Economic Landscape 1945-79 Flashcards
What was the post war consensus?
• mixed economy - mixture of private and state owned businesses - bank of england, gas and electricity, coal, steel all nationalised
• full employment - Keynesian work schemes introduced to keep unemployment low and stimulate the economy
What was Butskellism?
• The almost identical policies of Labour and Conservative governments in order to implement the post war consensus
What was Keynesian economics?
• the government spending more stimulated the economy e.g the government created Keynesian work schemes to create jobs and money
What is monetarism?
the idea that by controlling government spending causes the economy to grow
What were the Conservative stop and go policies?
• stop - when government spending got to high, higher bank interest rates were implemented to save money and freeze wages in the public sector
• go - when demand for public spending decreased, bank interest rates decreased to let the economy grow
Why were Conservatives accused of only implementing go policies before an election?
• so that the economy would look successful, therefore making Conservatives look good and gain support from the electorate
What is stagflation?
• high unemployment
• high inflation
• slow economic growth
Why did stagflation become an issue in 1964 - 79?
• government had been spending too much, inflation inevitably rising
• stop - go policy worked in the short term, but made exports less competitive, led to issues with balance of payments
Explain the problem of stagflation 1964-79
• balance of payments crisis - more imports than exports
• 1963, unemployment high and rising, 878 000 - highest since the war where unemployment basically disappeared
• British economy growing slowly due to lack of investment in new industries - only 2.3% growth compared to 5.6% in Italy - European competitors doing better
Why did Harold Macmillan introduce NEDDY in 1962?
• minister, employers and unions met to plan the future of the economy
Why did Macmillan introduce NICKY in 1962?
set up to regulate wage increases
Why were NEDDY and NICKY ineffective?
it was voluntary, only provoking discussions and was hard to regulate.
Why did tensions increase between the trade unions and the government in the 60s and 70s?
•stagflation and industry negligence from the government led to unemployment and low wages
• government policies like NEDDY and NICKY were inaffective, therefore the trade unions didn’t trust the government to deliver change, led to more union militancy and strikes
• in 1964 3 million working days were lost
When did Wilson devalue the pound and why did he do this
• 1967
• to decrease the price of British goods abroad in order to increase British exports to deal with the balance of payments crisis
Why did Wilson devaluing the pound cause arguments in the Labour party?
• led to increased cost of living, negative impact on the working class
What was the oil crisis in 1973/74 and what did it result in?
• by 1974 oil prices had increased by 400%
• supply had been cut by 15% - disasterous as it was a main power supply, made even worse by industrial action with miners and electrical engineers
• 50 mph speed limit enforced, TV closed down at 10:30 each evening, panic buying of petrol - impacting quality of life
• therefore Heath (Conservative) voted out
How much was Britain loaned by the IMF and when and why did Wilson agree to this?
• £4 billion
• 1976
• The value of the pound had slumped as international banks lost trust in the British economy due to high inflation
What was the consequence of Britain receiving the IMF loan?
government had to agree to £3 b spending cuts to prove that it was capable of paying its debts- massive failure for Labour
