The failure of deregulation

Question 1

Balance of payments deficit

Answer 1

Removal of exchange controls fuelled consumer spending abroad Drained money from Britain
→Increased balance of payments deficit

Question 2

Encouraged borrowing

Answer 2

Thatcher wanted ‘careful savers’, but borrowing became the norm
→Private household debt increased from £16 billion in 1980 to £47 billion in 1989

Question 3

Riskier financial schemes

Answer 3

Deregulation and the ‘big bang’ led to unscrupulous financial schemes → contributed to financial crisis 2008

Question 4

Black Monday

Answer 4

Unregulated stock market led to stock prices rising until they lost value and collapsed
19 Oct 1987: value of stocks on London stock market fell by £50.6m