Economic position

Question 1

What was Britain’s economic position 1990-1993

Answer 1

• Started to improve after Black Wednesday (1992)
• General economic condition started to improve in 1993 - unemployment rates slowed down and the housing market began to pick - up
• 1990 - deep recession, high interest rates, steep rise in unemployment 1.6 to 2 m, serious slump in house prices, home owners in negative equity
• Huge government for transport and NHS, government resorted to high public spending, ERM to solve inflation, interest rates 15%, Britain pulled out of ERM damaging reputation of conservatives

Question 2

What was Britain’s economic situation 1993-1997

Answer 2

• Economic recovery accelerated - government borrowing was reduced as inflation came under control
• By 1966, the value of the pound, now valued by the market had a higher exchange rate against the Deutschmark than when Britain was in the ERM.
• Britain’s growth rate was outstripped its European neighbours.
• Productivity slightly up, consumer spending went up, car ownership increased
• Wednesday interest rates fell, unemployment fell, lucky US coming out of recession, world trade expanding.