1974-79 - economic Flashcards
What did inflation peak at under Callaghan?
24.2%
What were the consequences of inflation?
Meant Callaghan couldn’t deliver on his promise to stray away from the ‘stop-go’ economic policy of the Conservatives.
Why were relations with the unions strained?
Due to cuts to public spending and rising unemployment
How did Wilson pacify the unions between 1974-5?
Put an end to the ongoing miner’s strike, giving them a 35% pay increase
Promised a new ‘Social Contract’ with unions
What was Wilson’s ‘Social Contract’?
An informal deal in which the government would deliver social welfare benefits in exchange for voluntary restraints in pay settlements
When was Callaghan’s wage freeze?
December 1977
What was the wage freeze, and what impacts did it have?
In an attempt to keep up with the terms of the IMF loan, Callaghan introduced a 5% pay freeze on all public sector workers. This angered both the unions and the left of the party
When was the IMF Crisis?
September 1976
What was the IMF Crisis?
The Labour government was forced to apply to the International Monetary Fund for a loan of nearly $4 billion.
What were the conditions of the IMF loan?
IMF negotiators insisted on deep cuts in public expenditure, greatly affecting economic and social policy.
What were the consequences of the IMF loan?
Public Sector strikes, unfulfilled promises and internal party divisions
How was the IMF Crisis a success?
Ultimately handled it well, the economy stabilised with inflation falling below 8% by the summer of 1978.
How were the Labour party divided?
Left of Party - were against cuts to public services, pro-union and against EEC membership
Right of Party - recognised the need for cuts, frustrated by unions and pro-EEC
What key event reflected the divide in the Labour Party?
Battle lines drawn over the June 1975 Referendum on EEC membership
When was the ‘The Winter of Discontent’?
1978 to 1979, ended 22 January 1979
