The Post-War Consensus - Economy (AQA complete notes 2/16)

These notes are for the 'Making of Modern Britain' course on AQA and as such follow the spec, although would be useful for all modern britian courses. They contain hystoriography, detail and explanations. 

The notes are devided into the sections of the spec, therefore there are 16 documents (as there are 4 areas (politics, economics, society, and foriegn policy) and there are 4 periods (Post war, Wilson + heath, Thatcher, and Blair)). 

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  • Created on: 08-10-15 22:30
Preview of The Post-War Consensus - Economy (AQA complete notes 2/16)

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The
Post-War
Consensus?
1951-1964
­
Economy
The
growth
of
the
economy
and
the
rising
living
standards;
problems
of
the
balance
of
payments
and
`stop-go'
policies;
economic
motives
behind
the
application
for
membership
of
the
EEC
in
1961
Attlee
1945-51
Hugh
Gaitskell
- Keynesian
Achievements
- Keynes
negotiated
£2.2
billion
loan
from
the
USA
and
Canada
o Worth
noting
this
was
no
where
near
enough
- Marshal
aid
had
provided
£6
billion
- 1946
Industrial
production
was
back
to
pre-war
levels
- Almost
full
employment
- By
1950
10%
of
the
work
force
were
employed
in
nationalised
industries
- Many
British
companies
were
still
world
leaders
Issues
- By
1951
over
10%
of
GDP
was
spent
on
defence
o 30%
of
Government
spending
- Massive
debts
- Economic
crisis
in
1947
- Had
been
forced
to
introduce
prescription
charges
- War
damaged
infrastructure
- Balance
of
payments
crisis
with
£700
million
deficit
o Issue
added
to
by
Sterling
area
countries
buying
from
outside
the
sterling
area
as
their
wealth
increased.
o Also,
there
was
speculation
against
the
sterling.
- Old
industries
had
been
in
decline
long
before
the
war
- Consumer
goods
were
scarce
and
expensive
- Dollar
gap
with
Britain
maintaining
imports
from
the
USA,
meaning
that
currency
reserves
were
spent
on
US
goods.
o This
was
aggravated
by
the
fixed
rate
between
the
dollar
and
sterling.
Churchill
1951-55
R.A.
Butler
- Keynesian
- Butler
shared
many
of
the
economic
approaches
of
Gaitskell
(his
predecessor)
in
1954
the
phrase
`Butskellism'
was
coined
by
The
Economist.
- Set
economic
foundations
of
systems
followed
by
Conservatives:
o Full
employment-
whilst
growing
economy

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Expanding
welfare
o Military
defence
scheme
o Nuclear
weapons
- Churchill
had
a
low
opinion
of
Butler
and
indeed
economic
affairs
(T.O.
Lloyd).
Achievements
- Post
1952
the
national
income
increased
for
the
next
three
years.
o National
income
was
40%
higher
in
55
than
50.
o World
economy
had
improved.
o Money
flooded
back
into
the
currency
reserves.
- Savings
made
o 1953
-
End
to
food
subsidies
o Minister's
salaries
were
cut.…read more

Page 3

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Increased
export
prices
caused
by
the
Korean
war
was
short
lived.
o By
1955
£400
million
deficit
again.
- Encouraged
investment
o 1953
Budget
gave
investment
allowances
for
firms
spending
money
on
new
equiptment.
Issues
- Defence
expenditure
was
very
high.
o Caused
mainly
by
the
Korean
war.
o 30%
of
Government
spending,
12%
of
GNP.
o Worse
as
Britain
still
in
huge
war
time
debt.
- Welfare
expenditure
rose.
o From
under
14%
of
GNP
in
51,
to
over
16%
in
59.…read more

Page 4

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Balance
of
payments
deficit
(from
Labour)
dealt
with
through
credit
squeeze,
raising
interest
rates
and
controlling
imports.
- Economy
took
a
turn
for
the
better
52
to
54,
so
income
tax
cut
and
reduction
of
bank
rate,
for
expansion.
- 1955
to
56
there
was
inflation
so
Butler
increases
purchase
tax,
and
raised
the
bank
rate.
Stop-go
method
- Balance
of
payments
deficit
(from
Labour)
dealt
with
through
credit
squeeze,
raising
interest
rates,
cutting
industrial
investment
and
controlling
imports.…read more

Page 5

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Eden
1955-57
R.A.
Butler
(See
above)
Harold
Macmillan
- Keynesian
o `Less
faith
in
laissez-faire
than
his
predecessor'
­
Sked
and
Cook
o Assisted
trade
unions
in
his
policies
- Saw
movement
to
Chancellor
as
`demotion'
- Wasn't
too
pleased
to
be
Chancellor
Stop-go
Method
- February
and
April
1956
(stop)
o Raised
the
bank
rate
5.5%
o Restricted
purchase
credit
o Cut
public
investment
o Suspend
investment
allowances
o Cut
food
subsidies
o Tax
on
distributed
profits
raised
to
27.…read more

Page 6

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He
lacked
a
long-term
vision.
! Eden
didn't
really
understand
actions
at
the
Treasury.
He
moved
Macmillan
there
because
Macmillan
was
more
pliable
than
RAB.
Then
he
moved
Selwyn
Lloyd
to
the
Foreign
Office
because
Selwyn
Lloyd
was
pliable
too.
Both
men
lacked
the
experience
for
the
role.
Eden
did
not
ask
Macmillan
how
strong
sterling
was
(Macmillan
knew
it
was
vulnerable)
­
events
in
Suez
led
to
a
fatal
run
on
the
pound
which
brought
significant
economic
problems.…read more

Page 7

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Raised
interest
rates
and
purchase
tax
o Profits
taxed
raised
to
12.5%.
o Introduced
a
`pay-pause'
on
public
employees.…read more

Page 8

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Set
up
EFTA
o Increased
trade
with
some
countries.
o Not
as
successful
as
EEC
though.
- Attempted
to
join
the
EEC.
Issues
- 1957
non-resident
sterling
convertible
on
current
account
(liberalisation
attempt).
o Try
to
make
city
compete
with
New
York.
o Fundamentally
ineffective
- 1957
financial
crises
o Inflation
was
rising
because
wages
were
running
far
ahead
of
productivity.
o Run
on
the
pound
o Danger
pound
would
have
to
be
devalued
against
the
American
Dollar.…read more

Page 9

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£500
million
deficit
o By
1964
there
was
an
£800
million
deficit
- Increasing
strikes
o 1962
­railway
workers
postmen
and
nurses.
o Working
days
lost
to
strikes
! 1957
­
8.4
million
(highest
in
1950-69
period)
! 1964
­
2.2
million
! Around
5
million
days
a
year
(average)
- EEC
Veto
- Failed
to
keep
up
with
other
nations
(product
per
head)
o 1958
£380
lower
than
Australia,
Sweeden
ect
o 1963
£495
but
had
been
overtaken
by
France
and
Germany.…read more

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Not
as
wealthy
as
other
nations
(product
per
head)
! 1958
was
worse
off
per
head
than
US,
Sweden
Australia
ect.
! By
1963
it
had
increased,
but
been
over
taken
by
France
and
Germany.
o Fundamental
failure
to
rebuild
industry
! No
coordinated
attempted
to
modernise
old
stable
industries
like
ship
building.
! Government
focused
on
other
traditional
aims
instead
such
as
investment
overseas,
and
a
strong
sterling
area.…read more

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