To what extent did the Conservative governments of 1951 to 1964 successfully manage

  • Created by: fern
  • Created on: 21-05-15 11:02

To what extent did the Conservative governments of 1951 to 1964 successfully manage the British economy?

Advantages

  • Successfully managed the British economy due to averting Labour's past mistakes and the BOP Deficit- inherited £700M deficit in 1951 but by 1952 there was a BOP surpluss of £259M
  • Butler reduced income tax which was coupled with an increase in real wages (72 percent) when prices only rose by 45 percent. This gave people greater consumer power along with the ending of rationing in 1954 (number of Televisions increased from 340,000-13M)
  • Economic age of affluence was achieved without dismantling the welfare state- Macmillain built 354,000 houses in 1954, 2S prescription charges did not cause public outcry, expansion of education (11 universities, 6,000 schools)
  • Age of affluence can be said to be because of the economic management of the conservatives, led Macmillan to announce 1957 "most of our people have never had it so good"

Disadvantages

  • Butler ruined his repuation as an economic manager with his 1955 "pots and pans" budget. He was an economic innocent and had no economic plan in place, as was evident from his "stop-go" policies. In 1955 he introduced interest rates to prevent inflation whilst cutting income tax by 6p which would infact increase inflation. In 1957-1957 Thorneycroft cut taxes and the bank rate which led to increased prices,wage demands and strikes.
  • Britain's failure to join EEC-According to Macmillain the empire ceased to be profitable as there was significantly less productivity in Britain than in members of the EEC and the USA. the annual growth rate for Britain was 1.9 percent (1960-1979) in comparisson to France with 4.1 percent. EFTA (1960) set up in Britain performed poorly as combined population of member states was relatively low
  • Jan 1963 900,000 unemployed
  • BOP deficit became worse than what was inherited from Labour £748M

Evaluation

Initially, the conservative government aquired a deserved reputation as good economic managers with the age of affluence. However poor economic management in Butler's final budget as Chancellor in the late 1950s reflected that there were limitations to Conservative management of the economy. By the 1960s Britiain's anual growth rate was depleating and the empire ceased to be profitable in comparisson to the EEC. Economic success did happen regardless but arguably the successive governments did not know how to manage the consequences of prosperity (inflation,BOP)

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