Heath's 'U-Turn'

Question 1

What led to stagflation?

Answer 1

• The ‘Barber Boom’, following these economic changes led to a rapid rise in inflation, but without any rise in economic growth. Unemployment actually went up, something that was highly unsual at the same time as inflation.

Question 1

What led to stagflation?

Answer 1

• The ‘Barber Boom’, following these economic changes led to a rapid rise in inflation, but without any rise in economic growth. Unemployment actually went up, something that was highly unsual at the same time as inflation.

Question 2

What was the situation by the end of 1971?

Answer 2

• Unemployment started to creep towards 1 million, and inflation had risen to 15%
• This made the government feel compelled to do something to counter inflation and unemployment

Question 3

What happened in 1972?

Answer 3

• The government felt announced that in an attempt to counter inflation it was returning a policy of controlling prices and incomes

Question 4

Who started to help ‘lame duck’ industries?

Answer 4

The DTI

Question 5

How was Rolls Royce kept afloat?

Answer 5

• By government money

Question 6

Who were subsidies also granted to?

Answer 6

• Other private companies in difficult e.g. Upper Clyde Shipbuilders
• The threat that this Scottish company may be closed led to determined resistance from the workers

Question 7

What happened when people feared industrial action?

Answer 7

• Skillfully organised by Communist shop-stewards might become violent, the government backed down and authorised a subsidy of £34 million to keep the company going