Chapter 1.2 - Economic Developments Flashcards
How did the post-war boom affect rationing
-Food rationing came to an end on 1954
-Showed post-WW2 economic recovery was beginning to show through
How did the post-war boom affect birth rate
-Swift acceleration at the end of the Second World War leading to a fast growing population.
-By 1961 there were 51 million people in Great Britain, which was 5% (2 million) more than in 1951.
How did the post-war boom affect trade
-Global economy was booming after the war, so overseas trade increased which brought high-level earnings from exports and investments. This increased economy and caused plentiful employment
-Britain were able to import about 29% more goods than it had in 1951 for the same number of exports
How did the post-war boom affect employment
-By 1955 it was estimated that full employment had been achieved with only 200,000 unemployed, less than 1% of the workforce.
-The number of employees in traditional occupations, such as agriculture, fishing, coal mining and shipbuilding fell during this period
-There was a huge expansion in electrical and engineering work, and more jobs in industries relating to cars, steel and other metals
-Service industries (financial, professional services, transport) were growing
-By 1960 nearly 5 million people were employed in service industries. 1 in 5 of the population and roughly the same number in heavy industry.
How did the post-war boom affect wages
-Economic growth and low unemployment led to higher wages and a rise in income.
-In the run up to the 1956 election Butler boosted Conservative prospects with a ‘give-away’ budget that provided the middle classes with £134 million in tax cuts causing growth in consumerism and people felt more affluent.
How did the post-war boom help the Conservatives
-Allowed them to dominate politics as it allowed for them to continue to get votes as the countries’ trade, employment and wages were prospering.
-They could use the economy to boost their prospects during elections
-More affluent lifestyles employment opportunists, and improved life for the middle class
Outline the stop-go economics between 1951-64
- Imports exceeded exports and balance of payments crisis
- Government controls high interest rates and wage freezes
- Demand calls
- Output decreases
- Controls removed
- Increase in demand
- Rising imports
Why did stop-go economics create problems in the country with manufacturing
-Although higher salaries had created a large internal consumer demand, they did not encourage manufacturers to increase their export trade which would have helped bolster the export industries. This led to a trade deficit which helped to cause problems with the balance of payments.
What is balance of trade
The difference between the goods that a country imports and what it exports
What is balance of payment
Includes invisible imports and exports (e.g. services such as shipping, banking and insurance; the balance of trade is part of the balance of payments)
What problems did stop-go economics create for the government
-Growth in wages was outstripping the rate of increase in production and this brought inflation
-Conservatives had to maintain growth and employment at the same time as keeping prices steady
-Difficult to persuade the trade unions their members should not have high wage increases
How was economic policy causing problems for the nation and economy
-Suez crisis exposed Britain’s financial weakness, and started a run on the pound (rapid fall in value of the pound in international currency)
-Macmillan’s chancellor Thorneycroft believed in ‘monetarism’ which limited wages increasing and cut the money supply
-Iain Macleod was a one-nation Conservative who was opposed to monetarism as it would lead to increased unemployment and cutbacks in housing
How did overheating affect the British economy
-The govt was worried about it overheating in 1961 and introduced a ‘pay pause’ to hold down wage inflation and to ask for a loan from the International Monetary Fund.
How was growth and international competition affecting Britain
- It was becoming clear that economic growth in Europe was leaving Britain behind and that trade with the Empire and Commonwealth was not sufficient to keep up
What did the government do in response to Britain falling behind in economic growth
-1961 application to the EEC which was a symbol of reversal of policy and failure
-Lloyd, Macmillan’s third Chancellor of the Exchequer set up the National Economic Development Council and was responsible for long-term planning of the economy
-In 1962 a National Incomes Commission was added in 1962 to watch wages and prices
