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economic developments (1951-1964) - Coggle Diagram
economic developments
(1951-1964)
post-war boom
swift acceleration in birth rate and end of WW2, led to fast growing population
1961, 51 million people in GB, 5% more than 1951
global economy booming as countries rebuilt - sustained increase in overseas trade - high levels of earnings from exports and investments
1955, estimated full employment achieved, only 200,000 unemployed, >1% of workforce
traditional occupations (agriculture, fishing, coal mining, shipbuilding) fell
1960, nearly 5 million employed by service industries
run up to 1955 election, Butler was able to boost Conservative election prospect with a 'give-away' budget - provided middle class with £134 million in tax cuts
improvement in world trade in late 1950s enabled Britain to import 29% more goods than it had in 1951
Britain enjoyed higher income per head than any other major country (not USA)
UK's growth rates didn't exceed other countries; shares in world trade: UK, 25% (1950), 15% (1962), US; 27% (1950), 20% 1(962), West Germany; 7% (1950), 20% (1962)
adults used to wartime deprivation found themselves with money for cars, appliances, luxuries and entertainments
young generation grew up amid plenty and oblivious to past shortages, sought to enjoy life to the full
expansion in electrical, engineering, car, steel and other metals industries
balance of payment issued and 'stop-go' policies
high salaries created large internal consumer demand, didn't encourage manufactures to increase export trade - would've helped bolster export industries - trade deficit helping cause balance of payments problems
US pressure after Suez exposed Britain's financial weakness - started run on the £
imports exceed exports + balance of payments crisis - govt controls; high interest rates + wage freezes - demand falls - output decreases - controls removed - demand rises - rising imports
Peter Thorneycroft - believed in monetarism, limit wage increase + cut money supply
difficulty persuading TU that members shouldn't have high wage increases, particularly in industries where they felt they weren't gaining as much as other workers (coal miners)
Ian McLeod - one-nation, opposed monetarism, would led to unemployment and housing cutbacks
Macmillan's solution; an appeal to industry and public
crisis and divisions in cabinet carried on throughout summer 1957, Macmillan sided with those who wanted to keep up expansionist economic policy
conservative government faced with how to maintain growth and employment at same time as keeping steady prices
growth in wages outstripped rate of increase in production, brought inflation
economic picture was not as positive as the growth of affluence suggested
impact on conservative popularity
general air of consumer affluence reflected in budget generally accepted as key factor in Macmillan's 1959 re-election
economy expanded so much, budget of April 1959 provided tax-cuts of £370 million - more than Butler's 'election give-away' (1955)
Sterling regained value against dollar
didn't have lasting harm on popularity, improved dramatically by 1959
EEC application and rejection
Autumn 1963, Beeching Report published as part of review into cutting public expenditure - recommended rail network cuts, closure of 30% of rail network (public outrage)
rejection of application (1963) was serious setback for economic policies
hundreds of branch lines and thousands of stations axed, caused fundamental social change, and rural areas isolated
1961 EEC application - symbol of sense of failure in bringing about economic modernisation
Maudling pushed economy into 'go' phase by lowering the bank rate to encourage consumer spending
Macmillan reversed previous policy, decided essential for economy to be joined with Europes
growth rate rose from 4% (1963) to 6% (1964)
trade with Empire and Commonwealth was not sufficient to keep up
exports rose 10% (1961-1964), imports remained 20% higher :
became clear that economic growth in Europe left Britain behind
1961, worries of economy overheating forced govt to introduce 'pay pause' - hold down wage inflation - and ask loan from IMF
govt became further trapped in cycle of 'stop-go' policies in attempt to maintain economic stability
summary
although economy was still growing and living standards were rising, cycle of 'stop-go' hadn't been broken
economic growth would still lead to overheating through excessive, expensive imports + rising wage demands
Britain continued to slip behind foreign competitors
economic problems apparent in 50s hadn't been solved