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Modern Britain > Thatcher's Economic Policy: Stage 2 > Flashcards

Thatcher's Economic Policy: Stage 2 Flashcards

1
Q

What did the government deem to be the most important economic factor to get control over?

A

Inflation

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2
Q

What was interest raised to in order to combat inflation?

A

17%

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3
Q

What was the downside of increasing interest rates?

A

It cost more for businesses to borrow money

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4
Q

I) What, other than raising interest, did the government do to combat inflation in 1979?
II) What was the disadvantage of this?

A

I) Increased the value of the pound

II) It made exporting more expensive, and thus more difficult

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5
Q

What was the overall effect of increased inflation in early 80s?

A

A decline in output and demand

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6
Q

I) What did inflation rise to by May 1980?

II) Why?

A

I) 22%

II) a recession led to huge unemployment

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7
Q

What did inflation fall to by 1986?

A

2.5%

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8
Q

What led to the UK joining the ERM by the late 1980s?

A

Further recessions

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9
Q

What does ERM stand for?

A

European Exchange Rate Mechanism

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10
Q

Why was unemployment dealt with less in in Thatcher’s stage 2 economic policy?

A

Inflation was seen as more important to deal with than unemployment

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11
Q

What was a key criticism of the privatisation of British businesses, and what was the theory behind this?

A

That the stocks were sold off at a cheaper cost than they should have been to make sure all of them were sold

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12
Q

Was the economic state in the years 1990-1992 positive or negative overall?

A

Negative

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13
Q

Was the economic state in the years 1992-1997 positive or negative overall?

A

Positive

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14
Q

Give 3 indicators the economy was in a bad place by the end of 1990?

A
  • Decline in manufacturing output
  • High interests
  • Rise in unemployment
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15
Q

What was the main effect on homeowners in 1991-early 1992?

A

They entered negative equity. This was especially a problem for conservative voters

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16
Q

What was a poor economic indicator in early 1992?

A

Government fell into high public spending and borrowing

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17
Q

Where was particularly in need of public spending in 1992?

A

The NHS

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18
Q

I) When was black Wednesday?

II) What happened on that day?

A

I) 16th September 1992

II) Britain left the ERM due to the collapsing value of the pound

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19
Q

What was the major benefit to leaving the ERM?

A

Britain no longer ha to keep high interest rates

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20
Q

Give 3 positive economic indicators between 1992-1997

A
  • Unemployment slowed
  • housing picked up
  • Benefits caused by flexible working practices (Thanks to deregulation) were felt
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21
Q

Why did world trade increase between 1992-1997?

A

America was also coming out of a recession

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22
Q

What were 3 key parts of the economic state of the UK by 1997?

A
  • Unemployment down
  • Consumer spending (and car ownership) up
  • productivity was up, though not a lot
23
Q

What was the 1986-1988 “Lawson boom”?

A

Rapid economic expansion due to Chancellor of the Exchequer Nigel Lawson

24
Q

I) When did the stock market crash after the “Big Bang”

II) Why?

A

I) 1987

II) Deregulation

25
Q

What was the GDP growth in the 1980s

A

2.2%

26
Q

What was the goal of the loan guarantee scheme?

A

To make it easier for businesses to get loans

27
Q

I) What did the Enterprise Allowance Scheme aim to do?

II) How?

A

I) Help unemployed people start businesses

II) Give them £40 a week for up to a year

28
Q

I) What was inflation at by 1990?

II) Was this higher or lower than it had been in 1980?

A

I) 10.9%

II) Higher

29
Q

What did did income tax drop to from 83% by 1988?

A

40%

30
Q

What had standard tax dropped to by 1988 from 33%?

A

25%

31
Q

Why did Thatcher dislike labour councils?

A

She thought they wasted a lot of money

32
Q

I)Which council was Thatcher’s main conflict with?

II) Who was in charge of this council?

A

I) The Greater London Council

II) Ken Livingstone

33
Q

I) When was rate Capping introduced?

II) What was it?

A

I) 1985

II) A limit on the amount a council could tax residents

34
Q

What did Sheffield and Liverpool councils do in protest of Rate Capping?

A

Refused to set a budget, but backed down due to the threat of bankruptcy

35
Q

I) When was the Local Government Act passed?

II) What did it do?

A

I) 1986

II) Abolished the GLC and other Metropolitan local authorities

36
Q

What was the main argument against the Local Government Act?

A

Power was too centralised and as such it was less democratic

37
Q

Did Thatcher ever manage to reduce public spending?

A

No

38
Q

I) When does chancellor Nigel Lawson abandon his spending targets?
I) Why was this a blow to his reputation?

A

I) 1986

II) He was a staunch Thatcherite and so agreed cutting public spending was important

39
Q

When did Privatisation accelerate?

A

1984 with the sale of BT

40
Q

What were interest rates raised to in 1979?

A

17%

41
Q

What did Inflation rise to in 1980?

A

22%

42
Q

What did inflation fall to in 1986?

A

2.5%

43
Q

What did inflation rise to by 1990?

A

11%

44
Q

What was the effect of higher interests on businesses

A

Output and demand fell

45
Q 
In just two years how was
I) Manufacturing output
II) Production in the west midlands
III) Steel production 
effected?
A

I) Fell 15%
II) Fell 25%
III) Fell 30%

46
Q

How did Thatcher encourage the employment of younger workers?

A

The Youth Employment Scheme

47
Q

How high was unemployment until 1987?

A

3 Million

48
Q

What was a major external change that effected British industry?

A

Foreign competition and increasing globalisation

49
Q

What did Geoffrey Howe argue should be the fate of cities like Liverpool?

A

They should be subject to “managed decline”

50
Q

What is a result of the Economic alignment?

A

1981 riots in Brixton, Handsworth, Chapeltown and Toxteth

51
Q

What did the Scarman Report find to be the cause of the riots

A

Race, poverty and Unemployment

52
Q

Who led the regeneration of the deprived inner cities?

A

Michael Heseltine

53
Q

When were there further riots despite the repeal of the sus laws?

A

1985

54
Q

What becomes the second biggest financial district in the country thanks to Heseltine?

A

Canary Warf

Modern Britain (18 decks)

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