Heath And The Economy

Question 1

What were the economic aims of Heaths government?

Answer 1

• strengthen economy and curb inflation
• legislate and transform IR

Question 2

What were the inflationary causes ?

Answer 2

• 1971, US Nixon ended system of fixed exchange rates which existed since WW2 and was an affect of devaluation
• 1972, pound allow to float freely with value determined on the market. Poor industrial performance meant that when it floated downward in value imports became more expensive
• worldwide increase in commodity prices
• Heath Gov aimed to stimulate growth through cutting tax and increasing public spending however their 1972 budget pushed prices up

Question 3

When and what was the start of Heaths U turn ?

Answer 3

1971
- pledged to reduce state intervention on failing enterprise ‘lake ducks’
- 1971 nationalised the Rolls Royce air divisions despite facing bankruptcy as it was seen to be vital

Question 4

What was Heaths initial U turn followed up by ?

Answer 4

He was not prepared to allow unemployment to increase as the price of exuding government expenditure
- February 1972 Gov granted £35mil to Upper Clyde shipbuilders to safeguard its 3000 jobs
- New Ministry of industrial development set up in April to provide aid to industry in deprived regions of the country to stimulate growth
- the successes seen by this were short lived due to the opec oil crisis

Question 5

What was the OPEC oil crisis ?

Answer 5

October 1973 Yom Kippur war Egypt and Syria attack Israel hoping to recover land lost in the war of 1967
- angered by the price Ed western support the pair cut oil supplies and qaudroupled their prices
- damaged Britain who relied on OPEC for 50% of its energy