the economy under Heath
- Created by: ulas.akkus
- Created on: 27-02-17 17:40
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- The Economy under Heath (1970-74)
- Barber Boom (1970-73)
- Anthony Barber (CofE) reduced taxes, redeuced gov. spending and scrapped the Prices and Incomes board
- Why? Promote econ. growth to strengthen application to join the EEC
- Result Short term "boom" which briefly saw econ. growth at 7.4%
- Another result was a rise in council house rents due to the tax concession to the wealthy
- Quickly followed by a huge rise in inflation and spiralling wage demands
- 15% inflation by the end of 1971
- Inflation wasn't accompanied by econ. growth. The unusual combination of inflation and unemployment: stagflation
- 15% inflation by the end of 1971
- Unemployment went up
- Inflation wasn't accompanied by econ. growth. The unusual combination of inflation and unemployment: stagflation
- Reactions
- Heath was condemned for:
- Abandoning the mixed economy
- Undermining the principle of full employment
- Weakening the welfare state
- Heath was condemned for:
- Anthony Barber (CofE) reduced taxes, redeuced gov. spending and scrapped the Prices and Incomes board
- Heath's U-Turn
- Abandoned his style of gov. after 18 months
- 1971: Rolls-Royce nationalised
- Subsidies
- Upper Clyde Shipbuilders
- Gov. feared violent, communist organised protest so authorised a subsidy of £34 mil.
- Upper Clyde Shipbuilders
- Abandoned his style of gov. after 18 months
- 3 day week
- Heath's wage restraint angered miners
- Asked for a large pay increase in 1973
- NUM introduced overtime ban
- Heath introduced a series of emergency measures
- Jan 1974: 3 day week, 50mph speed limit, TV close at 10.30pm
- Heath's wage restraint angered miners
- The Arab-Israeli War and the oil crisis (1973)
- OPEC showed displeasure at countries that had been too friendly towards Israel
- UK's oil imports cut by 15%
- Cost of Britain's oil imports trebled
- Caused petrol shortage and damaged the BoP (£1bn)
- Value of £ falls to $1.57
- Interest Rate raised to 15%
- Caused petrol shortage and damaged the BoP (£1bn)
- OPEC showed displeasure at countries that had been too friendly towards Israel
- EEC
- De Gaulle died in Nov. 1970
- France fearful of German independence
- Jan 1st 1973: Britain accepted
- Barber Boom (1970-73)
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