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Advantages
- Thatcher's
monetarism relied on market forces and evened out old structural imbalance –
particularly between manufacturing and the service sector.
- The
privatisation of major firms, e.g. British Aerospace (1981), British Telecom
(1984), British Leyland (1984), Rolls-Royce (1987), and British Steel (1988)
and the selling off of the gas, water and electricity industries provided ready
cash and widened share ownership.
- Deregulation
led to the abolition of exchange controls, 1979. British assets abroad rose
(£12 billion – £110 billion, 1979–1986). This was a record level and second
only to Japan.
- Thatcher
signed the Single European Act (SEA), allowing for the free movement of goods
within the EU – which increased competition and efficiency. Trade with Europe
increased significantly.
- From
1986, Britain experienced an economic boom with growth of over 4%; unemployment
fell in 1989 and although it grew again in 1990, there was continued improvement.
- Thatcher's
taming of the unions – helping to make GB more competitive.
- Kenneth Clarke’s
work as Chancellor – recovery from the recession of the early 1990s and the new monetary
policy after Black Wednesday (reducing the basic rate of income tax, government
spending and reducing the budget deficit).
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Disadvantages
- Monetarism
was detrimental to traditional manufacturing, and unemployment was particularly
high in old manufacturing centres. (Nearly 20% in Northern Ireland and over 15%
in many parts of Wales, Scotland and Northern England).
- Thatcher's
era was marked by fluctuating interest rates. Deflationary measures brought a
rise in unemployment in the early 1980s (3 million in January 1982) and again in
the early 1990s.
- The
tying of the British pound to EU exchange rates, as part of the Exchange Rate
Mechanism (ERM) proved disastrous when restrictions imposed by the ERM put
pressure on the pound, leading to a run on the currency. Black Wednesday in
1992 ended British membership of the ERM. It also damaged the credibility of
the Conservatives' economic management, and contributed to the end of the 18
years of consecutive Conservative governments in 1997.
- The
inheritance of the winter of discontent in 1979 and battles with the unions
which culminated in the Miners' Strike of 1984.
- The
performance of other countries suggested Britain was in economic decline.
- The
social impact of economic policies may be considered as an issue.
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