Flashcards in Economic Developments Deck (21):
What is deflation
Is a fall in the price of goods and services. Inflation controls the curb spending such as freezing. Wage rises, increasing taxation or making borrowing harder so that goods can not be bought on credit. Deflation can lead to unemployment as people have less money to spend so less goods and services need to be produced
What 3 episode had shaped 1951 Britain
1930s Great Depression
World War Two
Rebuilding of the post war Britain under Attlee loud our government between 1945-55
What was the post war consensus
The idea that victory in the war and the sacrifice that enabled it led to a fairer, better Britain in the future.
What was the post war boom (13)
End to food rationing in 1954
Austerity of the war time was over
Higher standards of living
Acceleration in birth rates at the end of ww2 leading to a fast growing population- 1961- 51 million people in Great Britain 5 percent more than in 1951
The global economy was booming as counties rebuilt after the war- increase in overseas trade- high levels of earning from exports and investments.
By 1955 full employment had been achieved with only 200,000 unemployed
Even though there was a decrease in jobs such as fishing and coal mining there was an increase in electrical and engineering work.
Service industries were growing - in 1960 1 in every 5 people worked in service industries.
Economic growth and and low unemployment brought wages up.
£134 million in Tax cuts for the Middle class
Growth in consumerism
World trade improvements meant that Britain could import 29 percent more goods than it had in 1951 for the same number of exports.
Britain had higher income per head than any other major country apart from the USA
Why were the late 1950s viewed as years of optimism
More jobs, more money, better housing and the provisional of the new welfare state. The adults who had been used to war time deprivation found themselves with more money to spend on cars new appliances and luxury and entertainment while the younger generation were able to enjoy life to the full
What was the "stop-go" economics
Came from an expanding economy, with low interest rates and rising consumers still spending (go) and the result of the economy overheating, with wages and imports exceeding productivity and exports necessitating a deliberate slowing down or deflating of the economy (stop) through high interest rates and spending cuts
Efficiency- getting more produced per worker per shift per hourly wage in this way costs are reduced, profits are increased and workers are freed up for other uses.
Why did the conservative government need to introduce the stop go policy
The growth in wage was outstripping the rate of increase in production and this brought inflationary.
It was difficult to persuade the trade unions that their members should not have high wage increases particularly in some industries such as coal where miners felt that they were not gaining as much as other workers.
It was introduced to control excessive spending that would lead to an unwanted increase in imports and to pay for the rising costs of public services.
What was run of the pound
A term describing a rapid fall in the value of the pound in international currency markets especially in relation to the U.S. Dolls
Who was Peter thorneycroft
Conservative mp from 1938
Although he resigned as chancellor of the exchequer in 1958 under Macmillans government. he returned to the cabinet in 1960.
He was a great supporter of Margret thatcher and served as chairman of the Conservative party from 1975-1981
What was Peter thorneycrofts idea due to the run of the pound under Macmillans government
Believe in monetarism, he wanted to limit wage increase ps and to cut the money supply.
One nation conservatives opposed this because it would lead to increased unemployment and cutbacks in housing
Why was their pressure from the USA
Over the suez crisis, it showed Britans financial weakness and started a run of the pound.
Who was Enoch Powell
A conservative mp from 1950-1970
Critic of the post war consensus
Well known for his immigration speech in 1968 which he was sacked from the shadow cabinet.
He opposed the entry into the EEC so tried to persuade people to vote labour.
In 1974 he was elected Monroe the Ulster unionist party
What evidence shows expansion of the economy in 1959
The budget of 1959 proved tax cuts of £370 million
When was the economy at its peak
What was "pay pause"
What were the two biggest problems faced in 1962
In 1961, worries about the economy overheating forced the government to a pay pause. To hold down wage inflation and to ask for a loan from IMF
The balance of payments problem and the economics of stop go
Why did Macmillan reverse his party's previous policy's
How was this addressed?
1.As Britain could not keep up Economically. Macmillan decided it was essential for Britans economy to be joined with Europe's. The 1961 application was a symbol of the sense of failure in Bring about economic modernisation.
2. Lloyd, Macmillans third chancellor of the exchequer set up the national economic development council known as neddy, consisting of the government representatives, academics, employers and the trade unionist and it was made responsible for long term planning. A national incomes commission known as Nicky was added in 1962 to keep an eye on wages.
Is the increase in the price of goods and services which occurs when people have more money to spend than there are good available. Some inflation can help the economy because it encouraged manufacturers to expand their businesses and employ more people. However to much inflation can lead to the economy overheating as workers demand higher wages because of higher prices.
What was the 1963 beeching report
Published as part of a review into cutting public expenditure. It recommended massive cuts in Britain's rail network, including the closure of more than 30% of the rail network, provoking public outrage. Causing social change and leaving many rural areas isolated.
How could it be argued that the economy was improving in 1964
'Go' phase by lowering bank rate to encourage consumer spending.
Growth rate rose from 4% in 1963 to 6% in 1964
Exports rose over 10% between 1961-1964