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THATCHER - economic policies (Monetarism (Reversals of policy (Public…
THATCHER - economic policies
Monetarism
Move away from consensus politics using Keynes
Inflation was reduced to single figures in 1982
Believes inflation is the biggest problem and strives to increase the value of the pound by reducing supply
Raises interest rates and supply less money
Human cost: unemployment hits 1 million - UK loses 25% of their manufacturing base, riots occurred e.g. Brixton London
Reversals of policy
Public workers were awarded a 25% pay rise in the Clegg Commission
Gave British Leyland more subsidies
Allowed an above inflation pay settlement of 16%
1981 - varying opinions to here policies 'the lady's not turning'
1980 and 1981 budgets slashed government spending, cutest housing and social security - many were badly effected
Privatisation
(when public sectors are made private)
Thatcher's cure to stagflation : removal of governmental monopolies and contracting out of services
Hope it would cut give expenditure on loss-making industries, cut civil servants replacing them with private employees and t would reinvigorate the economy promoting competition and innovation
Intention is to gain revenue for government from
popular capitalism
(everyone should have opportunity to own property) where ordinary people could own shares of private companies
Sale of British Telecom and British gas
Large increase in shares sold
was actually very uneven share of shares
Long term impact
Money used to pay for tax cuts
Competition increased
But prices increase faster than inflation to benefit shareholders
Privatisation after Thatcher
Privatisation of British Rail 1994-97
John Major's introduction of Public-private partnerships
Deregulation
wants to remove rules that prevent competitiveness
Oct 1979 - removal of exchange controls which fuels greater overseas investment
Oct 1986 Big Bang - growth of finical services but contributes to the 2008 crash
Modernises stock market - rise in household, personal and mortgage debt
2003 20% families are in debt
Lawson Boom
Greater availability of credit - due to deregulation
Reduction in taxes - Thatcher believed taxation of the poor bred dependence at the bottom , 1988 tax cuts of £4 billion and 4/5 of highest tax rates cut which encouraged consumer spending so income tax falls
Trade unions
Thatcher's manifesto in the 1979 election had included a promise to reduce the power of the trade unions:
Promote individualism and popular capitalism
Align heavy industry economy to finical economy
1980 wasn't compulsory to join TU when joining a firm
1982 could be sued for illegal strike action
1984 Trade Union Act
March 1984 - March 1985 Miners strike - looses public sympathy due to provocative methods. Relations improve after this, Tu membership falls, working days lost to strikes significantly falls, employment acts 1988,89,90 weaken TUs