Bitain In The 70S Flashcards
(31 cards)
What was the Bretton Woods System, and why did it end in 1971?
A: It was a global monetary system where currencies were fixed to the US dollar, which was backed by gold. It ended when Nixon ended the dollar’s convertibility to gold due to inflation and overspending, causing currencies to float freely.
Q: How did the end of Bretton Woods affect Britain’s economy?
The pound’s value collapsed, dropping from $2.65 in 1972 to $1.58 in 1976—a 40% loss—triggering inflation and economic instability.
Q: What was the impact of the 1973 Oil Crisis on Britain?
A: Oil prices quadrupled, increasing the cost of living and production, worsening inflation, and contributing to an energy crisis that led to measures like the three-day working week.
Q: What is stagflation, and why was it significant in 1970s Britain?
A: Stagflation is the combination of high inflation, high unemployment, and stagnant growth. Britain faced this between 1972 and 1976, with inflation peaking at 25%.
Q: Why were trade unions so powerful in the 1970s, and what was the result?
A: Unions had over 13 million members and strong ties to the Labour Party. Their frequent strikes, especially during the Winter of Discontent, paralysed services and undermined public trust.
Q: What was the Industrial Relations Act of 1971, and what happened to it?
A: It required unions to vote before striking and imposed a delay period. It faced strong resistance, was repealed by Labour in 1974, and replaced by the Social Contract.
Q: What was the Social Contract, and why did it fail?
A: It was an agreement between Labour and the unions to limit wage demands in return for policy influence. It collapsed in 1978 when unions rejected the 5% pay cap and strikes resumed.
Q: Why did Britain need an IMF loan in 1976, and what were the conditions?
A: Due to a record deficit and falling reserves, Britain borrowed $3.9 billion—the largest IMF loan then—on the condition of deep cuts to public spending.
Q: What did Prime Minister James Callaghan admit in 1976 about Keynesian economics?
A: He stated that the idea of spending to stimulate growth was no longer viable, as it led to inflation and ultimately more unemployment.
Q: What was the Winter of Discontent, and what impact did it have?
A: It was a wave of strikes in 1978–79 by unions demanding higher pay. Public services shut down, and it severely damaged Labour’s reputation, paving the way for Thatcher’s victory in 1979.
Q: What is collectivism in the context of post-war Britain?
A: It’s the belief that the state should take responsibility for citizens’ welfare through public services and economic planning to ensure social equality and political stability.
Q: What was Keynesian economic theory?
A: It argued that government should spend money and reduce taxes during downturns to stimulate demand and reduce unemployment.
Q: What kind of economy did Britain adopt after WWII?
A: A mixed economy: a combination of private enterprise and state ownership of key industries like coal, steel, and transport.
Q: What was the impact of U.S. spending on the Vietnam War on the world economy?
A: It caused inflation and a surplus of dollars globally, contributing to instability and the end of the Bretton Woods system.
Q: What was the Nixon Shock?
A: In 1971, Nixon ended the dollar’s link to gold, collapsing the Bretton Woods system and causing global currency fluctuations.
Q: How did the value of the pound change between 1972 and 1976?
A: It dropped from $2.65 to $1.58, losing 40% of its value.
Q: What triggered the 1973 Oil Crisis?
A: The Yom Kippur War led OPEC to quadruple oil prices, severely impacting oil-importing nations like Britain.
Q: What is stagflation, and how did it affect Britain?
A: Stagflation is when inflation and unemployment rise while the economy shrinks. Between 1972 and 1976, UK inflation hit 25%, while GDP shrank.
Q: What did Siegmund Warburg and Dennis Healey warn about in the mid-1970s?
A: Warburg described it as Britain’s most serious crisis ever; Healey warned of an “economic holocaust.”
Q: How were trade unions connected to the Labour Party?
A: Unions funded Labour, controlled 50% of its conference delegates, and held significant influence over party policy.
Q: What was the Industrial Relations Act of 1971?.
Q: What was the Industrial Relations Act of 1971?
Q: What was the result of the 1972 miners’ strike?
A: It paralysed the country and forced Edward Heath to declare a state of emergency.
Q: What did Edward Heath ask in the 1974 election?
A: “Who governs Britain?” — a challenge to union power and a plea for public backing against industrial unrest.
Q: What did Labour do after winning the 1974 election?
A: They settled the miners’ strike with a 35% pay rise and replaced the Industrial Relations Act with the Social Contract.
