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Economic issues (1918-79) (1930s strategies (He removed Britain off the…
Economic issues (1918-79)
Potential economic issues post WWI
Value of the £ fell, Britain ran out of gold
Inflation was 25% in 1925 - VERY BAD
Britain was forced to borrow £35.1bn (today) and spent its gold reserves to right the last 2 years of the war
Technology had developed around the world and Britain had to spend money they did not have to keep up
Poor trade deals as Britain had spent large amounts of money on the war, USA & Japan took parts of the market in 1920
1930s strategies
He removed Britain off the Gold Standard and floated it against other countries economies
Value of the £ fell, but it meant exports which were cheaper
Macdonald put in spending cuts which were unpopular
Led to a cut in interest rates from 6% to 2% which meant there was more investment and jobs in housing construction
Britain had lost money due to the Wall Street Crash, they loaned money to other European countries
Was also an increase in government spending on welfare
Butskellism
Govt struggled with inflation as it kept increasing
Unemployment - Govt raised taxes and making short term decision to avoid unemployment
Butler (Tory) and Gaitskell (Labour) agreed on may economic policies
Slow growth - lack of innovation and technology caused Britain to fall behind Italy in terms of growth
After 1951, Consensus Govt agreed to followe Keynesian Economics
1960 changes
This failed due to poor organisation and arguments between different government sectors
Wilson had to drop the £ from $2.80 to $2.40 in 1967
He tried to invest in new technology by creating a Ministry of Technology to create economic growth
Britain was refused entry to the European Economic Community by Charles de Gaulle in 1967
Alcoholic George Brown was Chancellor by Labour Leader Wilson in 1964
1970 problems
Major oil crisis in 1973 which caused the price of oil to rise by 70% as USA was involved in Arab v Israel war in 1973
This stopped economic policies being implemented
Country resulted in economic turmoil in the mid 1970s
Trade Unions had power - forced Heath to complete a U turn in 1972 that they disagreed with