Economic Issue, IMF Loan Flashcards
What was Callaghan’s initial economic aim when he became PM?
To end stop-go Economics
Why was the pound at risk of devaluation when Callaghan became PM?
BoP deficit could not be supported by the countrys reserves
When did Callaghan make a speech about difficulties of maintaining full employment?
September 1976
What were the ‘Twin evils’ mentioned in the speech?
The combination of unemployment and inflation
How much had government spending gone up from 1974-76 in proportion of the GDP?
6%
How many people unemployed in 1974 compared to 1976?
600,000 in 1974, 1.44 million in 1976
What was the countrys BoP deficit in 1976?
£1 Billion
What continued to happen to the pound even with interest rates? What were interest rates at?
Even at 15% interest rate, the pound continued to devalue
What was Callaghan preparing his government for with his ‘Twin evils’ speech?
Receiving an IMF loan
How much was the IMF loan which Healey negotiated?
£3 billion
What was an internal limitation of getting the government to accept the IMF loan?
They had to cut public spending back by £2 billion
Why is cutting public spending for Labour a limitation of their government?
Because they were meant to be improving peoples lives
What is significant about Britain taking a loan from the IMF?
The IMF was set up to help 3rd-world countries, not the third superpower
What did the IMF loan for Britain bring an end to?
Keynesian economics
How could the IMF loan possibly be seen as a success of Callaghan?
He fulfilled his initial promise of ending Keynesian Economics
