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ECONOMICS (Interwar economics (Baldwin reintroduced Britain to Gold…
ECONOMICS
Interwar economics
Baldwin reintroduced Britain to Gold Standard - 1926 General Strike resulted in inflation and 1924 Zinoviev letter symbolised threat of communism
Wall Street - Great Depression Economy contracted by 5%, but gov. supported the £ in the Gold Standard system via spending cuts and high interest rates.
McDonaldfailed attempts to curb unemployment and spending cuts were unpopular - leaves Gold Standard - divided Labour
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Economic recovery 1934-39 1. exports became cheap 2. interest rates were cut 3. government borrowing was reduced 4. gov debt reduced encouraged spending 5. cheap money allowed for borrowing and investing 6. availability of mortgages 7. 15% found work in old industries
Conservatives 1951-64
Opposed further nationalisation, wanted to end war-time rationing and reduce state control over the economy
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Stop-go policies
- Inflation - if prices started to rise then gov would raise taxes or limit pay - stopping the economy
- Unemployment - if it dipped then expansionary measures cutting taxes and interest rates 'go'
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Corporatism Macmillan introduces NEDDY (recommends pay freezes) and NICKY (advisory body for unions)
Dash for growth after corporatism is abandoned 1963he policy was a complete failure, higher demand simply led to more imported goods, a massive balance of payments deficit occurred, and capital ran scared from the faltering British economy
WW2 economy 1939-51
1939-45
- Military Expenditure
- Economic Aid Lend-Lease Agreement
National Goverment had no apprehensions in interfering in people's lives: 1. rationing 2. conscription 3. compulsory registration for employment 4. 8.5 mil work orders
1945-51 Austerity Debt from Lend-lease was costing a lot and economy had contracted - rationing re-introduced 1947 and UK were recipients of Marshall Aid in 1948
Nationalisation occurred between 1946-1949: Coal in 1946, Gas 1948, Iron and Steel 1949 - 20% of industries are nationalised
Labour 1964-79
Stagflation Causes: increased consumer spending, increased borrowing from IMF and increased unemployment
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Wilson Tries to respond with same stop-go policies, tries to prevent devaluation of the £ and 1967 cuts £, increased unemployment
Heath
" Oil crisis 1973 - the price of suddenly oil rose by 70%, which had a dramatic impact of the UK economy
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Post War problems Debt, inflation 25%, changing position in world of trade, low value of the pound due to exit of Gold Standard in 1914 and technological advancements
Ineffective solutions 1. Taxation and spending cuts 2. Interest rates and increasing value of pound 3. Protectionism