Changing Economic Environmnet

Anexos:

• Changing Political Environment

1. Post war boom
   1. Restrictions and rationing during wartime
      1. Meant that less money could be spent
         1. Accumulated savings and bonds
   2. After 1919 investment grew
      1. Could spend savings
      2. Huge speculative boom
   3. Boom came to an end
      1. Britain's industry declined
         1. Little investment during the war
      2. Foreign competition
2. The recession 1920-21
   1. Deflation
      1. Gov't spending cut 75%
      2. Interest rates rose
         1. Harder to borrow money
      3. Less money was invested in the economy
         1. National debt rose from 120% of GDP to 160%
   2. Loss of export trade
      1. After WWI Britain was no longer the dominant global economic force
         1. America & Russia
      2. New foreign companies
      3. Declining industries
   3. Tarrffs or Free trade
      1. Tarrifs
         1. Adding tariffs to certain goods that are imported into the country
         2. Advantage: Helps to protect domestic industries
         3. Disadvantages: Prevents consumers from having access to cheaper goods
            1. Other countries apply tariffs to British exports in retaliation
      2. Free Trade
         1. Means that domestic industries have to compete with foreign competitors
         2. Disadvantage: Competitive foreign businesses can out-compete British ones
            1. can cause unemployment and poverty
         3. Advantage: There are no tax on foreign goods
      3. Retrenchment
         1. The policy of spending cuts promoted by Lloyd George
            1. To appease middle class voters
      4. The Geddes Axe
         1. £87 million cut
            1. Mainly from military budget
            2. Some health welfare and housing cuts
3. The impact of the 1926 General Strike
   1. Led to the Trade Disputes and Trade Unions Act 1927
      1. banned sympathy strikes and mass picketing
   2. Considered a mistake
4. The depression
   1. Gold Standard
      1. Britain was in debt to America
         1. America had stores of the pound
         2. Pound could lose value
            1. And result in loss in confidence in the currency
      2. MacDonald had to cut benefits or risk devaluation
         1. Split labour party
      3. King George V created National Gov't
   2. Special Areas Act
      1. Gave aid to areas that had the highest unemployment rate.
   3. Hunger Marches
      1. Led to the formation of the National Council for Civil Liberties
      2. limited impact
   4. British exports decline 50%
   5. unemployment rose to 2.5 million
   6. economy shrank 5%
5. Recovery 1934-39
   1. Removal from the Gold Standard
      1. Cut interest rates
      2. more saving
      3. Inflation could be controlles
      4. Growth averaged 4% a year
   2. Britain's World rule
      1. Declined
      2. 1948 IMF loan
         1. Used for general expenses not investment
      3. Overseas conlficts
         1. Expensive
         2. Korean war
         3. Greek civil war
         4. Suez crisis
      4. 11945-51 boost in world trade
   3. Nationalism
      1. State control of industries
      2. Aimed for full employment
      3. Waste of money
   4. Managed Economy
      1. Military Expense
         1. State intervention
            1. Increased war production
         2. 1939-15%
         3. 1940-45-50%
      2. Economic aid
         1. US provide help
         2. 1940 Land Lease agreement
      3. Austerity
         1. WWII war debt of £4bn
         2. Damage to trade
         3. US competition
         4. Rationing was reintroduced
         5. Influence of USA
   5. Between 1932 and 1937:
      1. Real incomes rose 19%
      2. GNP rose 23%
      3. Exports increased by 23%
      4. UE fell from 17% to 8.5%
6. 1951-79 Economics
   1. Stop-go Economics
      1. The strategy the government came up with in order to balance inflation and unemployment
      2. 1954-64 there was a period of growth
         1. raised taxes and interest rates to slow down inflation
   2. NEDDY
      1. National Economic Development Council and Office
      2. No legal control
      3. Industry and union cooperation
   3. NICKY
      1. National Income Commission
      2. Strikes increasd
      3. Advisory council
         1. Mainly ignored
   4. Problems by 1964
      1. UE at highest levels since end of WWII
      2. 1961
         1. gov't refused to devalue pound
            1. Borrows £714mill instead
   5. Harold Wilson and the Economy
      1. Price and Income Act
      2. Technology
      3. IRC
      4. Devaluation
   6. Ted Heath's Horrific Britain
      1. Free markets
      2. Spending Cuts
      3. 1975-Dennis 'the eyebrows' Healy
      4. IMF Loan
      5. Monetarism